Personal finances are one of the most interesting and difficult aspects to control more so when you are a youth trying to make ends meet. In this essence, the most important aspect is how you budget the little money you earn on a daily, weekly or monthly basis. Most people fail in the planning part of how to use their hard-earned money. For example, a wrong perception that many have is that they spend money and save the remaining. I was taught an important principle by my good father when he gave me 20,000 Kenya shillings to cater for my grandma’s transport and upkeep when she goes back to upcountry. By the time she was leaving for upcountry, 5000 Kenya shillings were the ones available. When dad came back and asked how I had spent the money, I had no explanation since I tried to fix expenses where necessary but they didn’t balance. From that day I leaned the importance of budgeting and planning carefully for any given amount.
Step 1: Pay your tithes and offerings: This is a challenge but I always do my best not to fail due to what I earn on a monthly basis.
Step 2: Statutory Deductions: To be sincere, I am not a fan of these deductions because I can’t question the government on how it spends them. I try to avoid some deductions as much as possible. Don’t confuse this with tax evasion (tax evasion is illegal).
Step 3: Savings: In George S. Clason’s book, The Richest Man in Babylon, I leant an important rule of saving at least 10% of my earnings. This has helped me even when times have been hard such as during this Covid-19 pandemic whereby I have not had much difficulties in financial help.
Step 4: This step is based from the same book highlighted in step 3. It entails controlling one’s expenditures. This implies that I only spend based on my income. For example, I would not want my expenses to get beyond what I had budgeted for. As I began in my introduction, if I had budgeted well for those 20,000 Kenya shillings, I wouldn’t have had a difficult time explaining how the 15000 shillings were used. This to me was the first financial lesson I learned and from the day I started to live alone, I have kept all the receipts of my purchases and also recorded my expenses in a Microsoft Excel spreadsheet. Some of my family relatives have termed the move as being too much stingy but I have never given heed to what they say. I cannot do something to please somebody else if in the first place it’s not good for me. Fortunately, most of them have come to ask for financial help from me and sometimes I remind them of my strict financial principles and how they are an economic defensive tool to me.
Step 5: Avoid Debt: American Radio host, Dave Ramsey once said, “The decision to go into debt alters the course condition of your life. You no longer own it. You are owned”. The biggest debt I have ever had was the student loan. After paying it off, I was at peace. In William Shakespeare’s “The Merchant of Venice” Antonio borrowed 3000 ducats from Shylock (a money lender) for his friend, Bassanio. In the bond Shylock and Antonio “agree” that if the debt is not repaid, Shylock shall have a pound of Antonio’s flesh. What a horrible deal! The lesson that I got from this illustration is that I should not have that “surety” when I am getting a loan from someone.
In conclusion always earn wisely, budget wisely and spend wisely or else you won’t have anything for a rainy day!