Money management is not as easy as we always thought. One of our readers inboxed us with a not very unique problem that can face all of us.
Dear team, i am a manager in an automotive firm in Nairobi, my problem is i am always broke. i earn a net of around 150,000 but by 15th of each month i have nothing remaining. No major project. Nothing. I request for advise.Lozi reader
This confession came as a shock for many online users who commented on the same. Majority of the comments said they earn about a quarter of this much but are still able to survive. One tweep even asked our guy to employ him as a fund manager at minimal fee, promising him savings of up to half the amount monthly.
This problem is quite common based on what other users commented. We went around and came up with 5 ways you can better manage your funds.
Tip 1: Develop the right money mindset
You’ve probably heard it before, but success depends on having the appropriate perspective on your life and money. You won’t be able to succeed if you are constantly telling yourself, “I’m broke.” Your actions are a direct result of the thoughts you have.
The appropriate mentality entails having self-belief in your ability to succeed, committing to hard effort, and developing your ability to inspire and drive yourself.
Tip 2: Plan your spending
Getting rid of debt, making savings, investing, and just living… You need to have a plan around your finances in order to do any of these things. That requires developing a budget.
A budget not only enables you to plan out what you may spend, save, and invest, but also ensures that your expenses are kept below your income.
The richest individuals on earth have budgets and manage to stay wealthy. Although they may not refer to them as budgets, they undoubtedly have strategies for their spending, saving, and investing. And if they do, you ought to follow suit! The objective is to maintain financial control and assign a task to each dollar you make.
Tip 3: Spend less than you earn
Spending more than you make makes it impossible to save money and increases your risk of becoming overextended and incurring debt. You’ll experience a constant sense of financial insecurity.
If you haven’t been successful in the past, may it be that you haven’t found a budgeting strategy that suits you well? There is no one technique to budgeting that will work for everyone, so using the method that suits you best will increase your chances of success.
Make a list labeled “Why I’m broke” and include a list of the things you’re spending your hard-earned money on if you want to be honest with yourself. On this basis, you can construct a budget, improve your money thinking, and plan your future finances.
Tip 4: Up your spend-discipline
When it comes to achieving financial success, one of the greatest areas where people struggle is self-discipline. Sometimes even I have trouble with it. With the best of intentions, people create goals, but they don’t necessarily stick with them over time.
Many failures and objectives getting off track are a result of having a poor day and feeling depressed, or having a great day and feeling overly joyful and worthy. Thus, how do you address this?
Because developing self-discipline requires practice, it’s important to make an effort every day to do so. Keeping your goals obvious will allow you to view them every day and maintain motivation.
Tip 5: Reduce your borrowing
Not making preparations, spending more than you make… Just charge it to your credit card, correct? You assure yourself that whatever it is, your next paycheck will be enough to cover it. The costs increase while it becomes more difficult to catch up.
It’s crucial that you make a plan to get out of debt if you find yourself in this scenario. But for your strategy to work, you must promise to cease using credit to make purchases and taking on further debt.
Tip 6: Begin saving now
You must save if you wish to amass wealth. Now. Too many people make the error of believing that all they need to do to start saving is to make more money, but that way of thinking is completely incorrect. It all boils down to developing a habit and being consistent when it comes to saving money.
Focus on saving what you can, and do it consistently, even if your income isn’t as high as you’d like it to be. This will help you develop the habit of saving.
Tip 7: Invest
Perhaps you’re thinking, “I can’t invest.” I’m bankrupt! The most frequent justifications I hear for why people don’t invest are as follows: Gambling is investing. Rich individuals are the only ones who invest. Investments are too challenging.
If you’ve ever used any of those justifications, it’s time to stop right away. Real wealth is created by investing, which is how you put your money to work for you.
There are numerous options for how to invest your money. Start by making contributions to any employer-sponsored retirement plans and utilizing any matching funds that are available.
To maximize the amount of money you may save for retirement while taking advantage of the benefits, you can also think about starting an individual pension account.
Tip 8: Avoid peer competition
This needs to be added to your list of reasons why you’re broke if you’re guilty of buying things to compete with others. Never evaluate yourself against others. If you splurge in an effort to maintain appearances, you risk getting into serious debt attempting to keep everything up.
According to a well-known proverb, if you want to amass true wealth, you should live today as though no one else will ever live again so that you can.
Don’t worry about what other people think of you; instead, focus on your goals.
And most importantly, on your path to wealth, concentrate on being thankful and content. The competition you face most often comes from within.
Tip 9: Prioritize paying off debt
If you are in debt, you already know how bad it is. I won’t tell you any more. The issue with debt is that most people don’t give paying it off a high priority. They don’t properly budget and don’t make their “this is why I’m broke list.”
They are OK with paying the minimal amount due or a little extra, but they don’t take the time to calculate how long it will take them to pay it off or to develop a strategy for doing so quickly.
Reduce your spending and/or boost your income, and then aggressively target your debt with the extra money you have available. It entails deciding on a strategy for repaying your debt, following through with it, and realizing that the aggressive position is only temporary.
You’ll have more money available once your debt is paid off, which you can use to invest in the things that are important to you.
Your mentality of “I’m broke, but I’m rich” will change more quickly the sooner you begin paying off debt.
Tip 10: Do not be scared or panic
Ah, the anxiety of failure! This is a major issue. Too many people avoid making changes to their bad financial conditions out of fear of failing. They worry about putting forth the effort, making the sacrifice, making the commitment, making mistakes, or losing their money. They worry that learning responsible money management will take too much time or be too challenging.
If fear is keeping you from trying, you should realize that you will not succeed unless you attempt. That entails moving forward incrementally.
Start by auditing your current finances and then create a budget and a long term plan—Having difficult doing it on your own? Seek help shamelessly. Don’t let the fear of failure keep you stuck.