February 14, 2023
Written by UJJI Team
“Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.”
— Ayn Rand
When you think about your relationship with money, what comes to mind? Our money habits are learned from an early age, and yet financial education is not a major curriculum subject for young guys. It is strange how these fellows handle their finances. Except for those born with silver spoons, who probably do not have to go through the stress of thinking about the next paycheck, making financial arrangements is a must for young people of this generation, and it cuts across all classes.
Having financial literacy is key to understanding the value of money and how to manage it. If the basic knowledge isn’t there, it can be hard to hold onto money when you make it. Concepts like saving regularly, using debt wisely, and managing risks effectively might seem common sense to some, yet many still go on to spend their whole income with little or no savings at all.
Most income earners want to make the financial leap to comfort zones but find it difficult, and the reason is that they have inadequate savings and investments. The question is, why is it difficult to save? Most people will say it’s because they do not make enough money to invest. However, the income effect may still hinder some people’s savings, even if they get a raise. A simple tip that will help you balance your income, expenses, and savings is by defining your financial goals. This will serve as a guide when it comes to saving.
Short-term financial goals (for the next year or six months) are needed to control your expenses in real-time and get rid of unnecessary expenses.
Medium-term financial targets (for the next 2–4 years) are more global plans that can be implemented in the near future.
Long-term financial goals (from 5 years onwards) are the most ambitious. They often relate to ensuring a comfortable old age or purchasing real estate or business for children and grandchildren.
The fact is that financial independence is best achieved by saving part of your income each month. To do this, you need to ensure that you have control over your outgoings and know how much you can afford to save every month.
When you treat saving like one of your monthly outgoings and after a couple of months of becoming used to not having that money to spend, you will manage what you have left after saving. The best strategy for consistency in saving is to ensure that the same amount of money leaves your bank account each month. You only get to develop a good relationship with money once you learn how to save!
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