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By Michelle Wanjiku
As we begin this month, it’s important to ensure that you are making smart financial decisions and are taking steps to better your financial future.
You would think that someone without kids, no loans to pay off and earns a decent salary, lives a good life and has a lot of money saved up. However, this is not the reality; most of these people are living paycheck to paycheck with no savings whatsoever.
You need to ensure that you are not only just earning money, but are putting it to good use so that you can improve your financial situation.
This means making smart financial decisions that not only help you use your money wisely but also come up with ways to make your money benefit you in the future.
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What are these smart steps you should be taking as you earn money?
1. Live like you will not get a bonus
Most people spend more money when they know they will be earning a little bit more at the end of the month.
You might be tempted to buy something expensive you don’t really need, just because you know you will be getting a bonus later on.
However, this denies you the opportunity to better your finances. Instead of overspending just because you know you will have a little more money in your account, you can use this money to invest or you can add it to your emergency fund.
This will mean that you not only save more than you anticipated but that you stick to living within your means because you won’t get the bonus every month.
2. Save for a rainy day
Life is full of surprises; you don’t know what could happen tomorrow so it is only logical that you are financially prepared for whatever arises.
We have heard this advice thousands of times but do you really have six months of your expenses saved up?
The sooner you start building your emergency fund the better, you don’t want to be in a situation where you cannot pay your bills because you no longer have a source of income, or you cannot afford medical care because you don’t have extra money set aside.
If you are living above your means, have no money set aside and you are faced with a situation where you lose your job, you will end up in debt because you are not guaranteed to get a job immediately.
Not only that but you will end up settling for any job just so that you can pay your bills which can have a detrimental effect on your career.
It’s better to have money set aside and nothing happens than to have something happen and you are not prepared.
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3. Choose a conservative lifestyle
Speaking of living within your means, one of the biggest mistakes you are probably making is financing a lifestyle.
It doesn’t matter how much you are earning you should always live below your means; just because you can afford something doesn’t mean you should buy it.
Very many people fall into the trap of living in a certain way because they think that is what will show you are financially stable.
Even if you receive a salary increment, don’t immediately increase your expenses by moving to a bigger house or buying a bigger car.
It is better to live modestly now and build your wealth so that you can live luxuriously later on in life.
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In Conclusion,
It is making smart financial decisions that will enable you to build wealth and better your financial situation.
Unless you win the lottery, you will be able to become wealthy over a short period of time; it takes hard work and discipline when it comes to spending.
You will have to make certain sacrifices now so that you can have a better financial future.
Source: Entrepreneur
The writer is a Communication Officer/Digital marketer at Career Point Kenya. Email: michelle@careerpointkenya.co.ke