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Money is the pivot of finance. You cannot lead a truly independent life if you are not financially independent. You need to be in full control of the money you earn and the money you spend. Let me share some interesting characteristics about money that you should know. Maybe, it could help you in achieving a great financial year. Money is important, but you do not need a lot of money to live. If you need money, you do not have it and if you have it, you need more of it. Do you want a great financial life All you need is to know how to manage the money you have and make it work for you.
Most people take time to learn skills they love, but we often learn about money by trial and error. Yet, our lives are linked one way or the other to money. I think it would be easier to achieve financial success if you manage your personal finance as if you were running a small business where you do snap Cost Benefit Analysis on nearly every decision you make. Remember, money can inhibit or enhance what we can do. The sooner you start managing, saving, and investing your money, however limited, the better off you would be.
You do not need to be a financial guru to undertake these steps, but you would need a disciplined approach. You would also need to strive to improve your financial intelligence. I cannot overemphasize shrewdness because money issues can stress out if we do not plan for them. Make it a priority to secure your financial future, one month at a time.These recommended steps are simple to undertake, they bulge down to just three simple questions:
Where does all my money go?
How much can I keep?
What will it take to make the amount of money I keep more than the amount I spend?
How should we set out to creating a great financial year in 2015? Let us do this:
Believe in yourself and Find Your Passion
You become what you believe and you are simply a product of your thoughts. You are where you are today in your life based on everything you have believed. Change is possible whatever your situation, and the first step to financial independence is believing you can be independent. Your bank account may be empty, but believing in yourself at the most fundamental level costs nothing.
A popular question is, "What would you do even if you were not paid to do it?" What makes you fulfilled? You are more creative in your passion and money flows towards what you do with your talent and skills. Find that thing you love to do so much, you can't wait for the sun to rise to do it all over again. It is not about making a lot of money, remember you do not need so much of it. It is about leading a fulfilled life by living your passion and making the most of your life.
Set Financial Goals
The best way to achieve what you want in life is to set goals. A goal gives you a target and something to strive for. Concrete financial goals give you direction and energy to see through your goals to fruition. In addition, goals enable you measure performance and identify areas that need improvement. Separate your goals into short term and long term and make a distinction between your needs from wants.
Set a Monthly Budget
A budget is an itemized summary of likely income and expenses for a given period i.e. breakdown of how much money you have coming in and how much you are letting go. You cannot know where your money is going if you don't budget. You need to set realistic budget within your salary. A budget gives a sense of financial clarity. Do your best not to overspend where unnecessary. Make sure you list purchases in order of importance, starting with essentials such as rent/bond payment, food, water, lights, etc. It is important you plan for big ticket items e.g. a vacation. Sacrifice a few luxuries every month in order to pay for that big item.
Track your Spending
If you do not have that accurate picture of your financial life, you cannot make informed decisions. In addition to focusing on saving, try cutting back on spending. Go over every category and cut back as much as you can. Remember, every amount you do not spend now is another amount toward the things you want most. Tracking your spending gives you the pattern of your expenditure and you may be surprised at where your money goes. I have a book where I record my expenses and it has helped to identify where I can cut back.
Develop a Good Saving Habit
Have a saving plan. Paying yourself first encourages you to do your best to save some more every month. No matter how much or how little you are paid, you may never get ahead if you spend more than you earn. Often it is easier to spend less than it is to earn more, and a little cost-cutting effort in a number of areas can result in big savings. A healthy and consistent savings habit is very important to your financial well-being, and sanity. Please avoid spending on impulse. Resolve to set aside a certain percentage of your income, no matter how small it is. You would be glad you did in the long run. You may try using a direct debit on your account to set aside your savings even before you start picking your bills, if it would help.
Invest
Invest your money, invest in yourself and invest in others. Investing in yourself increases your capacity to earn more in the future. Investing in others is what true living is all about. Even if you're contributing to a retirement plan and a savings account, you can still manage to put some money into other investments. Investing ensures that your money does not lie idle. Invest your resources in line with your risk appetite and time horizon. You may contact an Investment Adviser from a legitimate institution to avoid mistakes.
Protect Yourself
Insurance helps you to cater for unforeseen events. Improving your finances goes beyond cutting your spending, it also involves covering yourself with life insurance, disability and health insurance. Please buy insurance and make sure your coverage is adequate and up to date.
Simplify Your Life
Buy low, sell high, and do not waste money. Constantly pursuing things you do not need to impress others puts you on a financial treadmill and not an upward escalator. For instance cars are consumer goods and taking Public Transport is nothing to be ashamed of.
I wish you the best!
Olayinka Oyetunji is married and blessed with three kids. She is a charterholder of the CFA Institute, a Chartered Accountant and a Chartered Stockbroker. She works with Ernst & young as a senior Manager advising public and private sector clients in Strategy and Transactions. She has over 12 years experience brokering mergers & acquisitions, valuations, financial modeling and due diligence as well as infrastructure and public sector advisory.
Olayinka is also a CFA lecturer and facilitates various finance-related courses and trainings.
She is the Convener of an initiative called C.L.E.A.N. with olayinka; a platform that uses storytelling to re-energize and inspire people.
She is the chairman of the Board of the Covenant Community Groups, She was the Governor of the Works and Study Groups and was an Assistant Pastor of TCN, Samonda Centre.
She is also a volunteer at the Gender Diversity of the CFA society Nigeria.
Please connect with her on;
http://linkedIn.com/in/olayinka-oyetunji-cfa-aca-acs
