I was speaking to a friend recently about finances especially this time when the Stock market in the USA and the world is plummeting. He told me about how he is losing or rather now lost so much money from the stock market. His dilemma was either to buy or not to buy more shares. That is not the point, however, he said something that stuck with me for a few hours during the day. He said, and I quote, “we spend 1/3 of our life working, we might as well take care of that dough”.
Being here for the fellowship, to be honest to some extent, I have been out of touch with making some personal financial investments something I have been accustomed to or I have found myself being a dormant member of some financial saving organizations I was part of. That got me thinking about my finances and ways I can make it better now that I still believe that I or rather we are allowed to adjust our resolutions as we go throughout the year. I reached out to my financial advisor and he was generous to share with me some tips. This might or might not apply to you but I am going to share away.
Financial literacy requires the possession of knowledge and understanding of financial matters. It often entails the knowledge of properly making decisions pertaining to certain personal finance areas like investing, saving and retirement plan options. At this stage in our life, we are prompted most of the time to peg our financial decisions on either a need or a want.
- A need is a thing that is necessary for an organism to live a healthy life. Needs are sustaining.
- A want on the other end is something that you would like to have, wants are entertaining.
I hope we all remember Maslow’s Hierarchy of needs, well it still applies in our lives. Maslow’s hierarchy is a constant reminder of the stage in my life where I am and where I want to be. It is a constant reminder of how much effort and work I have to put in towards achieving that self-actualization stage that we all aspire to achieve.
MASLOW’S HIERARCHY OF NEEDS
So where does the money come from and where does it go?
- Income (money in)
- Budgeting (Saving/investing and borrowing)
- Expenditure (Money out)
- Impact (I am still trying to figure out this one)
For most fellows, in the spirit of balancing our needs and wants, we come to the realization that these are pegged on Income, budgeting, and expenditure. Therefore, how can we allocate this income?
In an ideal scenario, this is a breakdown that can be helpful. I will peg it on a satellite fellow’s monthly allowance;
|Transport & Entertainment||10%||215|
However, Housing is always going to change depending on the city where you stay so adjust accordingly. Housing in San Francisco starts from $1350 upwards a room. Tip: the further you stay from the town center, the affordable the housing cost might be however always factor in the cost of transportation to help you make a decision when push comes to shove.
Financial independence begins by knowing where you currently stand. Therefore, start by determining the following;
During your free time, please try and carry out the following exercise;
- Do you have a budget?
- Are the budgets written down or they are in your mind?
- Do your budget balance?
- What are the impediments to doing a budget?
A few points to consider as you consider or start the journey towards financial independence:
- Start early, stay focused.
- You need to have a healthy relationship with money.
- Be consistent and disciplined. Live within your means.
- Borrow to invest versus spending.
Always remember that a typical employee cycle goes through the following stages,
- Marginal saving ( usually associated with age bracket of 0-25 years, this is also the college span)
- Borrowing (26-40 years)
- Investing in wealth accumulation ( 41- to 60 years)
- Wealth consumption (61-80+ years)
Your wealth consumption depends on financial independence during the prime years of your life. #Invest #wisely #It #is #nevertoo #late #to #start #investing!