“Discipline Is Choosing Between What You Want Now And What You Want Most”
We are living in financially unnerving tomes, especially because there doesn’t seem to be an end to the ever-increasing prices of commodities. Essential commodities have not been spared , and there is some struggle to just get by. It is therefore vitally important to have a plan not just to survive but to thrive. Since all good things start with a plan let’s look at how to have a financially productive year.
1. Start with a vision board
A vision board is your plan shown in pictures as opposed to words. A vision board is effective because you will usually put a pictorial of your plans and aspirations on a board in a place you easily see. So, for instance, if your goal is to buy a home or finish your degree course, or finally get into your dream job or business; you will get pictures that have the kind of home you want to buy, a picture of someone wearing a graduation gown and cap and a picture of the dream organization or location of business.
Most experts advise putting the board in your bedroom so that you see it first thing in the morning and last thing before you sleep. What a vision board does is emotionally stir you up to work towards achieving your goal. The constant reminder of seeing the board ensures that the goals are always on your mind.
To avoid overwhelm, you can further break down the annual goal, into manageable monthly chunks. And as with all goals monitor your progress monthly.
2. Put some savings away
Success in individual financial plans is hinged on a disciplined savings culture. You must have money remaining out of your monthly usage which goes towards growing your investments. I find that it is important to cultivate the discipline of saving, even if you feel you have little or nothing to save. Start with the much you can and with time you will find that you can easily increase the amount, once you streamline your expenses. Ensure that you preserve the purchasing power of your savings, by saving in a place where you get returns that match at least the inflation rate.
3. Confirm what your debt level looks like and make a plan to attack it.
Debt can be debilitating especially consumer debt. Credit card debt, mobile money debt, and all manner of unsecured debts have literally been thrown at consumers. It is possible to fall prey to all manner of debt because now it is easily available. You only need to subscribe to a mobile wallet and before you can say where is the money? You will get a message telling you the loan limit you qualify for.
If you are in debt, it is imperative that you make a plan to pay it off. Start with the most punitive of the debts, and chip at it. You could also start by paying the smallest because it will give you much motivation, once you pay it off, and you will be energized to keep paying off the remainder of the debt.
It is also very key that you stop accumulating more debt. It may be hard especially if you depend on debt to meet your everyday needs. Here you will need to be intentional and sacrifice so that you live within your means. Aim at paying for your expenses only through your income. Literary run away from debt. Delete all those money wallet Apps. Breathe in and out and start the journey of defining your debt-free life
4. Breakdown your essentials requirement
Personal finance experts advise that we should not spend more than 50% of our net income on essentials. Now before you start rolling your eyes, hear me out… Though our life circumstances may be different the rule of thumb, is you should not spend all that you earn. The point here is to define clearly what your needs are, allocate money to them, and jealously guard what is left, by utilizing it sparingly. As you start, your needs may account for 80% of your net income but with time if you are keen you will realize that some of what you consider to be needs maybe wants that you can do without.
You should conduct a lifestyle audit on yourself, and review whether the rent you pay is necessary or your needs would still be met by living in a cheaper home. Do your kids have to go to the most expensive school in your neighborhood, or they would still thrive in a less expensive one? The questions you ask yourself in a lifestyle audit are tough but are necessary to allow you a financially intentional life. Keep reviewing your expenditure to avoid lifestyle creep, until you have a comfortable balance of what you spend and what you save.
5. Establish an emergency fund
Life happens and it can be very unpredictable. This is why it is essential to put away some money to help you get by in case of an emergency. For an emergency fund, you will need to save an amount usually between 3-6 months’ worth of expenses. Note it is not your income, but your absolute must pay living expenses. Usually, an emergency fund is a big stash, you will probably need some time to build it up, so start today and start with what you have and work at it, you will eventually conquer the mountain.
I cannot stress enough the importance of an emergency fund, as it comes in handy when an emergency threatens to destabilize you. It covers the cost of emergencies or even covers your expenses when you are in between incomes.
6. Save for your big expenditures
For the most part, we know when we will have to make big expenditures, paying school fees, making a deposit for a home, and going on vacation among other expenses. The school dates are known well in advance, as well as when you want to go on vacation, so why not save well in advance to avoid the anxiety of having to come up with the money all at once?
I know it takes discipline, but you will agree it is necessary to be financially disciplined if you want to achieve financial freedom. So, start your sinking fund for big purchases in your house, for the children’s school fees, for vacation time with the family, and even for the home, you want to purchase. Little by little you will get to your goal.
A financially productive year is achieved by having a plan and executing it. The plan may not always go as planned , but you you will be the better for attempting than giving up even before starting.
Go on, i dare you to plan the financial year of your dreams.