The complex nature of our nation’s turbulent economy has impacted all Nigerians and leaves many feeling confused and anxious. Whilst it is important to keep abreast of what is happening in our national economy, it is even more important to focus on your personal economy. No matter how challenging things may be, the basic fundamentals of personal financial management still apply.
At the start of the new-year many people make resolutions to improve various aspects of their lives. Financial resolutions are often ignored. Setting resolutions will be completely futile if you don’t make a firm commitment and establish a clear plan of action. All major events such as getting married and starting a family, educating children, losing a job, buying a home, losing a loved one, and planning for your retirement and your estate come with financial consequences that must be prepared for.
Budgeting is one of the most important tools for financial security. Living as though nothing has changed during challenging times can make a situation worse; changing your spending habits must be a priority. A good budget will help you to plan and monitor your expenses so you can identify where to cut back if necessary.
An emergency fund is a must-have particularly during times of financial challenge. Build a fund with at least six months’ worth of your expenses in an accessible, interest-bearing account. If you are suddenly faced with unemployment, medical expenses, or other unexpected events, you will have this financial cushion to fall back on.
Try to develop a strict habit of setting aside a minimum of ten per cent of your monthly income for savings or investment purposes. One of the most effective ways to increase savings is to automate the process by having the funds deducted via a direct debit into a savings, money market or mutual fund account.
Getting out of debt or at least reducing it is another key step to taking control of your finances. List all your debt, and prioritise by focusing on the debt with the highest interest rates first. If your debt has become overwhelming, contact your creditors to discuss the possibility of coming up with more palatable repayment arrangements. Thereafter a systematic plan must be in place to meet your obligations.
As you navigate the current economic climate, don’t ignore your long term investing particularly if you have some savings and your debt is under control. It is important to remember that the stock market over the long term has outperformed other asset classes. Many stocks continue to sell at a significant discount to their true value. Seek professional advice to build a diversified portfolio across the primary asset classes. Most Nigerians do not have enough money saved by the time they face retirement. Remember that most of your retirement income will have to come from money you set aside and invest today.
A heather lifestyle means fewer medical expenses. If you are healthy you have brighter prospects in all aspects of your life. Do you need to lose weight, eat more healthily, or exercise more regularly? Take your health seriously and put things in place to improve it.
There is something everyone of us can do to earn extra income and it is time to find out what that is; freelancing, part-time work, tutoring, consulting, blogging, photography etc. Identify and nurture your passion and talent and begin to leverage on it to earn in 2016.
You are your greatest asset. Do you have adequate cover for your health and your life, particularly if you are the primary breadwinner?
Is your property including your car and home adequately insured? Things happen and you cannot afford to be careless with insurance. In addition keep up with routine maintenance of your assets so that you can identify festering problems before they require expensive repairs.
No one wants to think about death at the start of a new year, but you owe it to your family to put something in place should something untoward happen to you. Make an appointment with an estate-planning attorney who will put you through a relatively simple process. If you already have a will, review and update it to make sure you have included any new assets or beneficiaries.
In spite of how difficult things might be for you, there are always people worse off. Philanthropy is a powerful and effective way to change lives. Determine your area of interest and identify ways in which you can make a positive impact.
It is important to note that the best and most fulfilling things in life have little to do with money. Remember to count your blessings in 2016. May God grant you good health, happiness, and peace in the year 2016 and beyond. Happy New Year!
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