Unore Karutjaiva
In this article, I will share six steps that I personally used to manage my money during the tough economic times. The ideas I am sharing are not the easy or quick hacks most are looking for.
As a matter of fact, these are no hacks at all. Sadly, there are no shortcuts to a place worth going. It is tough, but these steps are practical, relevant, and any willing heart can manage.
Before I get into it, I need the reader to understand what I mean by a tough economy. The average household debt is at all-time highs, prices just keep going up, and we can predict another increment in the repo rate around the corner.
Salaries have fallen far behind inflation, and are not able to keep up with inflation. All this and much more contribute to a tough economy. Sometimes there is no one to blame, and even if there was, it still would not change the position the middle class households find themselves in.
Here are six ideas that aided me in getting and keeping my finances on track:
The first and most important step is getting on a budget. Knowledge on how to budget is all over the internet. Seek and ye shall find, or just reach me. An honest budget will include all expenses, including bank charges, parking tickets, and consider one’s impulse shopping habits. The purpose of the budget is to know where your money goes, and not to leave it to chance. You might experience your expenses exceeding income when you draw an honest budget. It is not something to fear, but to embrace as one privileged to see behind the curtain. With financial planning, ignorance is not bliss. Knowledge is power, and more so wealth. The budget will open your eyes to see how you spend your money, and where it all goes. To attain your goals, this will be a critical step to take as much time as you need in writing down all your expenses and income.
The next step is to categorise these expenses. All expenses are not made equal in the eyes of the banks and credit institutions, thus categories will get you to analyse your financial wellness. Write all the expenses down in the following categories: Debt – money you owe, re-occurring monthly bills and variable expenses – those that fluctuate monthly like food and clothing, and can change with lifestyle. They might be necessary but can be lowered, negotiated, and be done without.
The next step is to find and cut all unnecessary expenses, to a point you are left with a basic survival budget. This survival budget will only contain the things you cannot do without. It will consist of the basic needs and debts; no wants. At this step, you will also contact your creditor to see if they are willing to lower interests, and see what deals they are offering to lower your debt or interest on it.
Find a side hustle. Maybe cutting your expenses is just not going to cut it. So, find something that can generate extra income. Side hustles are under-rated. We all have skills that we can share. Use your Facebook, Instagram and TikTok to advertise. Just a simple text of “I tutor English” or “I do nails” will go a long way in creating extra income, and comes at no cost. Forget pride: it does not pay bills.
It is likely that you already have all you need with you right now. Focus on pricing, and deliver an excellent service, over-serve and give your client too much attention.
The two previous steps served to free up and increase your free money. This is the money you can use to complete the beginning of the final stage. This is not a walk in the park, or maybe it is. The power of this method is in simplicity. I have left out a lot of specifics due to the diversity of the audience and the difference in lifestyle. For this, call me or see a licensed, trusted financial advisor.
Pay off bad debt.
The kind of debt that annoys you most, or the one that has the highest interest rate or highest premium.
You do not want to have bad debt; the kind of debt that’s not backed by an asset like a mortgage or vehicle. I am talking about personal loans, overdrafts and out of control credit cards: pay those off.
That should be your first financial goal. This will free up cash to start taking investment risks in the marketplace. From my experience, people continue to lose their buying power through bad debts, loans and brand chasing. The rich know where their money goes, and they ensure it goes where it can grow more or have the most positive income. It goes to realising their dreams.
Do not be shy to live a little. However, live within your means. Avoid needless loans. Stay away from bad credit by settling your debt on time, avoid high interest loans, cut the middleman for unspecialised service and products. Limit impulse shopping, and set smart financial goals. Get a reliable financial advisor like myself.
Make time to get your finances in order. Do not neglect your health, prioritise it. It serves as one of your earning powers.
I can only hope you experience the power that comes with taking charge of your finances; it is quiet liberating. I look forward to hearing testimonies of those who dared to believe. - Unore Karutjaiva writes in a personal capacity.
Disclaimer: While I am a licensed financial advisor, every individual’s finances and lifestyle differs, and this does not constitute as financial advice. It is for educational purposes only