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Looking into 2016 with sound financial obligations

By Paul Kariuki | December 30th 2015

As we approach the New Year, many of us are in the process of outlining our goals for the coming year and among these should be financial prudence.

This is because there are some common money issues that may dog us well into 2016 if we do not have an agenda in place on how to address them.

Overspending is one such woe brought on by the fact that very few people have budgets to help them keep track of their monthly, weekly and even daily spending.

Remember wealth is created not by what one makes but rather what he or she keeps. So if reckless spending is not addressed in 2016, it will be hard to gain financial freedom in the foreseeable future.

Procrastination is another hindrance of wealth creation and is most exhibited in the failure to start saving.

Some people hide under the socially acceptable reasons for not saving like footing medical bills for ailing parents, paying fees for children and so on. However, financial experts advise one to prepare for any financial eventualities by making sure they set aside funds.

“Put away at least three months’ worth of your monthly expenses in an emergency fund,” says economist Joseph Mwangi, adding that lack of financial education often leads to loss of money.

“Nobody will ever care about your money as much as you do and it is time you learned how to do it,” he says.

According to Mwangi, paying attention to financial and business news and analyses can help one to quickly learn the best investment opportunities available. He says it is better to seek advice on how best to make your money work for you as opposed to doing nothing or continuing to do the same thing in 2016 yet hope for a different outcome.

Mwangi also notes it is important to keep one’s emotions in check when dealing with finances, saying those who do not end up with disastrous consequences.

“When things are tough, people often lose hope of any investment and narrow down all their expenses to consumption. Yet, it is possible to find great investment options during times of economic gloom,” he said.

People with some financial education will quickly recognise opportunities that abound in an economic downturn and will buy assets and shares cheaply all the while prospecting for better days ahead.

Another area to look out for according to Mwangi is on how you are spending money.

He gives the example of chamas where by democracy, members vote to buy uniform items that have no tangible benefits such as cups and plates at the expense of more pressing needs.

“Do not be afraid of going against the grain in stepping out to do things differently. Use your money in ways that generate wealth or that give you real value for money,” he says.

The people you hang out with could also be causing a dent in your financial goals. Those of a higher social class could make you spend amounts in things you would not normally do while those in the lower class could keep you from stepping out of your comfort zone to invest.

“You might have to change the friends you hang out with in 2016 in order to achieve your financial plans and goals,” he says.

What if you are a saver and your spouse a spender? Mwangi advises people in these scenarios to furnish their spouses, who they deem as being spendthrifts, with the numbers and explain the importance of keeping some money away for a rainy day.

He suggests tracking the extravagant person’s expenses for some time in order to build up your case then approach the issue with tact when your spouse is in an agreeable mood. It is also better to show the spender what he or she could have done better with the squandered money.

All in all, money matters are a sensitive topic and the worst that can happen is to make accusations that are not backed by facts as this can easily lead to an argument.

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