Personal Finance

Top 5 do’s for under 30’s to be financially independent.

financial freedom

For starters, to maintain a decent girl in Nairobi costs upwards Ksh30k a month. A nice second hand fast Subaru costs like Ksh1.4m and a one-bedroom house on Mombasa road go for upwards of Ksh3.5m. School fees and medical insurance in accredited institutions cost an arm and a leg.

These are the things that you want.

They are the things that make a statement when you join your friends at a football gathering or a drink up party where all of you are a few years after university and in your first or second jobs.

Your salary is startup salary and not small salary, and you have little other expenses, except if you are first born and your paros did not know what financial planning meant or you are just a fellow from the bundus and your shagsmodos depend on you.

So you want these things; you have to live today and you have to also cater for emergencies as and when they arise. You must always remember that retirement is real.  Looking at your current savings and your lifestyle, you will be lucky to even own a tiny car in 5years time. You have little knowledge of what to do to get a car or a house and information about investments is scanty in your life. You know more about the Kardashian’s mischief than you know about mortgages.

To get these things, you need either a fat salary (get employed in your grandmother’s company and dictate your salary) or craft a thrifty financial plan that will deliver these things to you. The second option is doable, and below are the things that must be in that plan to ensure success. Achievement has prerequisites and there are sacrifices that one must make at the outset in order to garner considerable success financially.

Start by managing your wants. What are the things that you can do without but still leave a comfortable life? What are the things that you can knock off your expenditure list and save or invest that cash? Your lifestyle dictates your expenditure; if you live in an expensive apartment that consumes more that 50% of your income, then you are in for a pauper’s life later on. Must you really have a girlfriend?

Having financial plans is crucial for your success. What do you want to achieve in your later years. How must you manage your money now to attain your financial goals and what level of savings must you maintain. A budget is the tool that will help you manage and channel your money towards the things that you will need later in life. Do you want to own a business later in life? What schools do you want your kids to go to and what kind of lifestyle do you want to live in your sunset days. How long do you want to be employed?

Dodge the debt traps on the way. The financial road in life is not all smooth sailing and debt traps can derail or consume a considerable amount of your resources if you do not manage debt wisely. The rule of the thump is; borrow to invest and not to spend. Avoid debt for consumption and avoid using your credit card to finance your entertainment needs. Swiping your credit card in a drinking joint at 2am in the morning reeks mismanagement.  Borrowing to buy expensive suits or entertain friends for show off will only bury you under irretrievable debt load that will delay or permanently injure your financial freedom.

Save, invest and invest again. You should have already started saving; if you haven’t, now is the next best time. Saving should be the first expenditure on your budget, after tithe. Your savings will allow you to sit on the investment table where important men and women are discussing how to buy land next to the road bypass or the next technopolis. Savings is your invitation to the table of investors apart from sorting your emergencies.

Research reveals that most under 30s have no idea where to invest their money and because of this, they often sit back and do nothing, or spend it on entertainment. It is okay not to know, however it is not okay to sit back and not do anything about it, worse is to spend the money on things that will quickly lose their value like holidays, cars and fads.

financial freedom

Investing allows you to grow your money and net worth and fulfill your financial goals.  Your money will work for you if you invest it. You can only grow rich if you earn money while asleep; that is passive income. There are many investment vehicles that one can board and deciding which one is right for an individual depends on their personal financial circumstances.

Once you have acquired your wealth, you need to ensure that you don’t lose it all at once. Insurance comes in to help you manage the risk of natural disasters as well as emergencies such as hospitalization of family members or bereavement. Take insurance to cover emergencies and remember that education and life insurance can be used as saving and investment options, especially where a high return is offered.

The future can only feed on the present; ensure you will have enough to feed on when you are fully grown up. Secure your future financially by managing your money now, then relax and enjoy as you eat the benefits that financial independence accords you.

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