Did you miss our personal finance session where we gleaned tips on financial planning with Chidinma Okoli, founder of Financially Literate Africa? No worries, we have you covered. It was a brilliant and engaging session that had key workable tips embedded in it.
Do Not Wait For The Money!
Chidinma kicked off the session by tackling the mindset of waiting for money before you chase your dreams. She suggested that building up your own funds towards your dreams is the right way to get started with chasing your dreams.
To further augment her suggestion, she delivered a number of brilliant tips which would be explained shortly. The tips were:
a. Commit to tracking your expenses
b. Have a budget and stick to it
c. Invest your savings
d. Diversify your income stream
1. Track All Your Expenses
On this Chidinma had this to say:
“I’ve come to understand that the reason why most of us spend a lot of money on “unnecessary things” (like that 30th pair of shoes you really did not need, or the 1000 dollar Jersey you could have done without) is that we don’t track it. Hence, we end up not really knowing the volume of money we spend on these things.”
To help with this, she suggested using a mobile app called Expense Tracker. The app shows you at the end of the month/week/day how much you have spent. Tracking your expenses with a budget tracker helps provide an accurate picture that can guide your budget planning, and that leads us to the second tip.
2. Have A Budget And Stick To It
No two persons can have the same budget, because our lifestyles, dreams and spending patterns are different. So you need a personalized budget. In drafting a budget, the following steps were suggested:
- Come up with a comfortable percentage of your income for savings and investments (10% should be the minimum).
- Make a list of what you spend daily and the typical amount you spend on them (see why tracking is important?)
- Separate your list into wants and needs — the day-to-day necessities.
- Reduce your list of needs to fit your budget size — after savings and investments — and allocate the remainder to service your wants.
A simple rule for budget planning is the 50:30:20 rule; 50% to needs, 30% to wants and 20% to savesting.
3. Invest Your Savings
“Don’t just save, make sure your savings are invested; and make sure funds are separated for that before you start spending at all.”- Chidinma Okoli
Investing your savings helps preserve the value over time. With Cowrywise, this is quite easy. You can save and invest simultaneously.
4. Diversify Your Income Stream
Diversify your income stream especially by taking up remote jobs. As a young person, it’s great for you to start investing aggressively and that can only get better with multiple income streams.
With these brilliant tips, we do hope that you start to put your financial house in order, if you haven’t, so you can reach your goals as soon as possible. If you have any questions, you can drop a comment or send them to us through Twitter: @cowrywise.