Personal finance management simply means how you budget, save and spend your money on resources. So it deals with income, spending, saving, investment and protection.
“You must gain control over your money or the lack of it will forever control you.” – Dave Ramsey
As a mom, the earlier you start financial planning the better for you, it’s never too late to create financial goals so you can give yourself and your family financial security and freedom.
At whatever stage you are in your personal finance, it is time for some reflection. First, let us to do a SWOT analyst’s.
SWOT analysis (or SWOT matrix) is a strategic planning technique used to help a person or organization identify strengths, weaknesses, opportunities, and threats related to business competition or project planning.
Strength: What are the characteristics you have that gives you an advantage over others?
Weaknesses: What are those things that put you at a disadvantaged position as regards to your finances? Limited education? Lack of skills? Laziness or procrastination? You should identify what these are and deal with them
Opportunities: What are the financial opportunities in your environment that you can explore to increase your earnings
Threats: What are the elements in your environment that pose as treat to your finances?
*WHY do we need Personal Finance Management?*
No doubt the pandemic has taught us a great lesson
It is very important that we plan and manage our resources in time like this so we can glide through this storm of uncertainty.
We are already seeing some economic consequences, but what is less visible is the financial-induced stress been caused by the uncertainty. You will agree with me that worrying about your finances can affect your mental health and well-being.
So let’s look at some of the best practices/tips on personal finance that will help us manage our funds and stay financially and mentally resilient amidst and post COVID-19.
1. *ANALYZE YOUR FINANCES*
“Many folks think they aren’t good at earning money, when what they don’t know is how to use it.” — Frank A. Clark
What are the weaknesses or threats to your ability to generate income? They could be lack of skills, procrastination, over-dependency on your spouse, business location, the nature of your work coupled with the demand for it or even the changing trends and so on.
The best place to start on personal finance is to analyze your strength. Those strength that you can leverage on. Look at your weaknesses. What are those weaknesses that are not enabling you to generate enough income?
You really need to identify your strength, then leverage on them.
“*Deal with the identified weaknesses/threats and be determined to improve your financial standing”.*
This is the very first step in moving up in your finances. Identify your strength, leverage on them. Identify your weaknesses and deal with them before moving unto next steps.
*2. IMPROVE YOUR SKILL*
The best yardstick for our progress is not other people, but ourselves. Am I better than I was yesterday? This is the only question worth asking. As long as you go to bed at night a better practitioner than the one who woke up that morning, you have succeeded. Your worth should have nothing to do with how your progress stacks up relative to another.
After analyzing your finances, you are most likely to find out that the major weakness and threat to your ability to generate income has to do with limited skill. This will mean that you learn new skills, consolidate your knowledge and perfect your techniques.
Who are the winners in this COVID -19 pandemic?
*Teaser: What new skills have you learnt in this lock down?*
– The Health Care Workers
– Food & Beverage Sellers
– ICT Gurus
So, why don’t you look at acquiring new skill in these areas?
Sometimes some of the weaknesses or threats to your ability to generate income could be lack of skills and if that is your own weakness, what you have to do is to learn the skill look for something that is trending that you can do to generate income
Schooling doesn’t assure employment but skill does.
3. *DIVERSIFY YOUR INCOME*
“How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.” – Robert G. Allen
In addition to building your skills and consolidating your knowledge, think about how you can leverage those skills to start a side hustle, monetize your expertise, and diversify your income sources.
There is no going back to normal after this pandemic because the definition of normal is likely to change. Take this time to ensure that you prepare yourself financially for what the new norm will be.
Have alternate source of income.- Eccl 11:2.
You should have at least four (4) income streams. It can be in the following areas;@
1- A regular job (but you must have an exit plan). Have a plan B.
2- Consulting (partner with the brains, you don’t have to be the specialist)
3- Have a business.(selling goods and/or services to make a profit)
4- Have investments (Think global, get acquainted with the financial market, buy assets, bonds/mutual funds, real estates etc. This attracts passive income and will help you in your days of retirement.
Gen 2: 10 – “And a river went out of Eden to water the garden; and from thence it was parted, and became into four heads”.
Just like the garden of Eden is watered from 4 different sources and was fresh and rich through all seasons. We all need a minimum of 4 sources of income to keep flourishing.
4. *CREATE AN EMERGENCY FUND (SAVINGS)*
“The habit of saving is itself an education; it fosters every virtue, teaches self-denial, cultivates the sense of order, trains to forethought, and so broadens the mind.” — T.T. Munger
You can’t talk about personal finance without Savings . It’s important to “pay yourself first”. How do you pay yourself first? Save at least 10% of your income. Ensure money is set aside for unexpected expenses such as medical bills, car repairs, rent, emergencies etc. Between three (3) and six (6)months’ worth of living expenses is the ideal safety net.
When you start making income, you must save. Don’t eat everything up the same day. Learn to pay yourself first.
5. *DEVISE A BUDGET AND CUT DOWN ON YOUR EXPENSES.*
“Don’t tell me what you value, show me your budget, and I’ll tell you what you value.” – Joe Biden
Budgeting is the most effective tool of managing your resources. Every kobo you generate and spend must be accounted for. If you don’t know how to calculate your expenditures and revenues , it’s definitely time to become that financially literate.
A budget is essential to living within your means and saving enough to meet your long-term goals. It is advisable to adopt the “50/30/20” budgeting method for your financial plan. It works as follow:
We should learn and work on how to have a plan B that multiple income stream
• 50% of your income goes toward living essentials, such as rent, utilities, groceries, and transport
* 30% is allocated to lifestyle expenses, such as luxuries and shopping for clothes, shoes etc.
* 20% goes towards the future: saving both for retirement and for emergencies.*
6. *AVOID DEBT*
“Some debts are fun when you are acquiring them, but none are fun when you set about retiring them.” -Ogden Nash
It sounds simple enough! Yes, I know and I understand as well.
No matter what, please avoid debt because it will always weigh you down. Debt will borrow from your future, that sounds like mortgaging your future.
If you really want to reach your financial goals, you must keep away from debt
“*To keep away from debt, don’t spend more than you earn. Cut your coat accordingly to your size.”*
*7. RE-INVEST YOUR INCOME*
3. “It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” – Robert Kiyosaki
Be in the habit of investing your savings and keep an eye on your investment, water it, and overtime your money will grow.
Consider creating liquid assets at this time. Ensure you are always liquid.
“*Keep liquid assets, it is indeed necessary in this period of uncertainty”. *
You do not really have to go into capital intensive projects now, except your financial position strongly supports it. You need every available cash in time like this. So invest in liquid assets. That is, assets that can easily be converted to cash.
You can Invest in stocks, mutual funds etc and earn interest passively from the comfort of your home. You can invest in real estate if you have the opportunity now, though it is a non-liquid asset. Non-liquid assets are more secured and earn higher cash value overtime.
8. *PAY ATTENTION TO YOUR HEALTH.*
We all know that “Health is Wealth”
Another thing this COVID-19 made me to realize, is that our health remains our most valuable asset. If not for anything at least the lockdown or the compulsory holiday gave some of us the opportunity to focus on our physical and mental health by reducing our daily stress and possibly our work load.
*Of what use is your wealth if you don’t have a strong health to enjoy it?*
You can’t enjoy wealth if you are not in good health👌👌👌
In conclusion, it is said that tough times don’t last, but tough people do. So let us try our best to remain positive and optimistic. This time will also pass!
It is my prayer that the Almighty God will give us clearer vision, ideas and opportunities that will take us to greater heights amidst this pandemic and beyond in Jesus name. Amen!