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6 Basics of Money Discipline You Must Know

The financial heights one can ride doesn't necessarily  depend on the amount of monthly income s(he) pockets. This is a fact, you can tweet it for free!

It's always a sad story finding out you're struggling with the same financial problems month-in month-out. One may rush to blaming the boss for a small salary. The truth is you can actually do much using your current income. The principles are the same whether you have much or less; the figures don't matter as such (I know you're contending with that...stop! lol!)

So, how can you achieve much with the bird at hand? Here I discuss six basics of money
discipline that will reveal the money management skills you need to make the most out of your income.

 

1. Be The First Expense

When we talk of financial freedom, we're simply saying tomorrow shall be easy and enjoyable as far as financial matters are concerned. We can't achieve this if we utilize all of our income as soon as we get it. 

Being the first expense means you pay yourself first. What most do is saving what remains after deducting all expenses. Don't pay your rent before you save!! Others say nothing is left to save at the end of the month. This is one of the main reasons why many people will never change their financial story. (You don't need to be in this group!)  I guess one big question is how much should one save? First, lets see how to know the percentage of your income going to the save kitty:

 (Savings/Total Income)*(100/1) = ......%. This formula will tell you what percentage of your income you're saving.

What you should really aim is setting aside at least 10% of your total income whenever possible, which you MUST save first before anything else. AND MAKE IT YOUR CHARACTER.
"Setting aside" ain't enough. Where you put it matters. You may use a home-tin method, a not-so-wise method since you shall surely be tempted to reach for the money any time. It may be destroyed, say by fire, or even stolen (by your bad friend..hah).


But there are better ways to save. This includes:
  •  Chamas (very useful for a short term saving plan),
  • SACCOs and Savings Account at Banks - best for starters geared towards building a savings plan. You can learn more on SACCOs in my article "why you must join a SACCO while you are young".
  • Fixed Deposit Account - This offer higher interest rates than savings account. The problem ( a good one though) is you won't withdraw for a specific period of time.
  • Unit Trusts - this enables people to buy shares and bonds without demanding much knowledge on stock markets . It has some risk but will help grow your savings.
It's advisable to find the best method that suits. But meanwhile, be the FIST expense!

 

2. Know Your Income and Expenses!

I struggled with this. Sitting down and calculating my monthly expenses?! That's why it's called 'money discipline' and that's why it's for the few who've decided to move their financial status to another level.

Track your expenses. How much do you owe? How does this relate to your monthly income? Are there expenses you can do away with? Do you have a budget? If you do, do you stick to it? Any adjustments you can make? Any ways to increase your income? 

Getting these statements right will place you on a better position to make better future plans. better plans means better chances of making it.

3. Draw Your Wealth Creation Plan

After knowing your numbers, you need a financial plan. What a wealth creation plan (or basically a financial plan) does, is help you focus steadily at your goals in achieving better money management skills and financial security. Be careful to stick to your vision and style of game! Most tend to change their plans out of external distractions; especially trying what your friend has succeeded in. 

Carefully think of your plan. Research enough information on your goals and how you can accomplish them. It's not such an easy task, so you need an inner motivation. Refer and review your plan on a regular basis. Each time you set your eyes on your plan see if there's anything you can add or change. appreciate yourself when making progress, learn for every mistake you make and don't repeat it. 

I advocate you read the article "what's your wealth creation plan?" to learn what it takes to come up with a good financial plan.

 

4. Check Your Debt!

A debt is a great tool to financing big projects. I know a number of guys fear debts, but trust me, with your income alone, you will either do little or ran with a snail pace.

 The secret to winning this game is applying simple debt management rules:
  • Make sure your debt is manageable; this depends on your income.
  • Never take a debt without a plan on how you'll spend and repay!
  • Always pay promptly. Don't miss to pay your installments!
  • READ and understand the terms of agreement before signing that form.
  • After getting the money, PLEASE spend it on what you borrowed it for! I've heard stories of people who spent debts wrongly. They are not beautiful stories, usually.

 

 5. Guard Your Investment.

Now that we've successfully put up an investment in place, I guess it's only wise we take care of the assets. This stage requires some patience, and as the old adage says, it surely does pay. Don't be enticed by the get-rich-quick-schemes. The faster you get money, the faster it disappears! build your wealth steadily and carefully. Investments are risky and hard to build, you don't want to lose yours. 

It's important to get some advice (like the one you're reading now..lol) but you need to be responsible for your investments. This means you take some quality time to research and gain knowledge and information in line with your investments. Spend time engaging with real business and issues touching your investments on ground and avoid relying on reports. Lastly, make a periodic review of your progress and never be intimidated by some negative specs that may emerge. Clear them and charge forward.

 

6. Pay Your Tithe Before You Save!

I put this point the last knowingly because I don't want us to debate over it. It's God who supplied the energy time and resources to enable you earn that income. Do we really need to discuss the importance of saying "thank you God" by simply giving 10% of your income? Our tithes do give God authority to zip off any unnecessary holes in our pockets (like diseases and accidents which will come for your wallet). The Best way of doing it is doing it before you pay yourself. God is so rich and not in need of our 10% thing. But He desires to bless us, so seize the opportunity, it's for your own good. try this (and you can come to thank me later...for the advice...lol)

It's my sincere hope that these six points shall be a big boost to your financial walk, especially to my fellow youth. We're on our first steps to realizing a bright future, let's lay a solid foundation as yet we have time. I've said somewhere that good words and quotes amount nothing if all they can do is make us feel good for a moment. Until we implement such strategies, we shall surely remain babes in money matters. All the best as you implement these tips.

It's your turn: Any financial tip that has been of help to you? Or any comment concerning this post? Please do share with us on the comment box bellow. Also remember to hit the share button for your friends.

Blessings!