THOUGHT OF THE WEEK

TIPS FOR FINANCIAL PLANNING

1. Start from the end- does starting from the end sound strange to you? In financial planning, you need to think about the end. This comes by looking at the vision of your life. Take time to look at why you work, what lifestyles is supported by your work, how does this affect your income and what will be its impact in the foreseeable future.

2. How do you spend your money- after all the hustle in the day, the question to ask is- where does my money go each day and even the entire year? This sometimes become difficult because we do not keep records of our expenditure and do not know where the money goes. It is therefore advisable to use debit cards and do online transactions where you can keep track.
3. Work out your net income: take an inventory of your income and expenditure. Your net income should be determined after you have taken out about 15-20% of your gross income as investment. Mostly after spending a chunk of our money before think of savings and investments.

4. Make monthly investments- make it a point to consistently transfer a specific amount of money into your investment account. Because some of the investment accounts have restrictions on withdrawals, you are less likely to be withdrawing from that account and spend. This is one sure way of securing your future.

5. Understand your investment goal- are you looking for regular income or growth of your capital in the long term. You will need to understand your investment horizon in order to make a good financial plan. It is advisable to maintain an investment account for a minimum of 3years for short-term investment goals.

6. Spend less- make it a point to spend less on things. It should cut across daily stuffs like meals, shopping using discounts etc. this will help you develop a habit of always spending within your means and helps you save a lot of money that you can deposit into your investment account.