As young people living in a developing continent with high levels of inflation, high levels of unemployment and a currency that is constantly being devalued, feeling immense levels of stress when we think about our finances is quite normal for a lot of millennials and Gen-Zs. The mere thought of how to pay your bills, pay your next rent or even afford higher education “abroad” can breed worry and feelings of helplessness among young people, impacting your everyday life, causing mood swings and sometimes even affecting your relationship with people around you.
To live a financially whole life where you are free from constantly worrying about money, there is a need to reframe your approach towards finances, as this can have a huge lasting effect on your overall sense of peace and well being.
Want to redefine your relationship with money, here are some helpful steps below:
1. Reflect on your relationship with money: Create time out to sit down with yourself in a quiet space, grab a journal and reflect deeply on your relationship with money. What kind of emotions arise within you when you think about your finances? Happiness? Satisfaction? Sadness? Worry and Anxiety? Hopefulness? Think about it and be very honest with yourself, write down all the emotions you typically experience with money and ask yourself further questions to understand the reason for those emotions. Identifying the core reason would help you make a conscious effort to improve your relationship with money.
2. Stay ON TOP of your finances: Look, you need to know where your money is going at all times, the only way to feel more confident about your finances is if you are aware of your financial situation at all times, and how do you do this?
- Set aside time to check your bank alerts and account statements regularly, it can be once every two weeks or even monthly (which is when most banks send a summary of your activities in the month). Don’t just open that email from your bank and close it, open the bank statement and scan through all the transactions for any weird entry that you probably are not aware of or double transactions that can happen sometimes, or even subscriptions you were not aware are still active and running. ALWAYS review your bank statements.
- Create & review Your Budget regularly: Have a simple weekly or monthly budget based on your income and your typical expenses, a good place to start in creating your budget is using the 50/30/20 rule a good place to start, which says that 50% of your income should go towards meeting your basic needs like housing, transportation, and feeding, 30% on your wants and 20% on your savings and investments. You can also use simple budgeting apps in creating a budget. Also, don’t forget to track your daily expenses as that gives you a sense of where your money is going.
3. Create realistic financial goals and constantly evaluate: On your road to financial freedom, there is a tendency to set larger than life goals, don’t fall into that trap. Ensure that your goals are SMART; Specific, Measurable, Achievable, Realistic and Timebound. Also, create time to periodically review your financial goals and evaluate to see how you are doing.
4. Level up on your financial literacy: An investment in yourself yields the highest return, if you want to build sustainable wealth, you must learn the principles of good money management, so spend time educating yourself on smart money habits. Listen to money podcasts, subscribe to financial blogs and newsletters, follow finance pages on social media (shout out to @FinLitAfrica), and stay updated on financial information.
5. If you have debt, prioritize your debt repayment: Debt, especially the ones with hefty interest repayment is a sure way to always be short on cash because you’re always paying off debt with any income you get. So create a simple debt schedule detailing all the debt you owe, and make a plan towards paying small amounts off monthly. You can automate this process as much as possible by setting a Google reminder for payment due dates and even standing orders with your bank.
6. Get insurance if possible: In this part of the world, insurance is not very common as folks would rather plead the blood of Jesus/call on Allah/Invoke traditional deities/or other Beings they believe in than pay a monthly insurance premium to hedge against unforeseen circumstances in the future. Don’t be like the average Joe/Jane, if you can, get health insurance, ask your employer to set up one for you, if you have valuable assets, also insure them, the amount you would pay as premium is nothing compared to how much you would spend in the case of an unfortunate occurrence, so stay ready. Also while choosing an Insurance partner, shop for companies that are reliable and have lower costs, also periodically review your premium payments.
7. Shop for banks that truly care about you and will not finish you with charges: You see all those crappy banks that only see dollar dollar bills yeah when they see you, this year, ditch them!! Yes! Your bank should care about you and not charge exorbitant fees while giving tiny interest rates. In choosing a bank, ask yourself, do they have any initiatives that show that they care about their customers and the community? Do they maybe offer affordable loans to small businesses and marginalised groups? If no, leave them and move to banks that truly care about you (preferably banks run by people who look like you, not oblivious old men and women in suits).
8. Look for ways to constantly increase your income: Multiple income streams is the bag we are all trying to secure these days, think about monetizing your skills and creating value for a fee. Be sure to check out the 21 skills that can help you monetize from anywhere and our video on #GMW2020 to learn how to increase your income as an employee, a creative and a 9-5er
9. Start saving and investing parts of your income: As mentioned earlier, you should seek to save and invest between 10-20% of your income towards securing your financial bliss in the future. You should also automate your savings and investments so that you are consistent with it. Click here and here to learn about saving and investment options for young Africans.
10. ALWAYS reward yourself: At the end of the day, life is to be cherished and enjoyed. So don’t get too caught up in the hustle to secure the bag that you forget to treat yourself periodically, Create a line in your budget for fun activities and attach a reward to some of your financial goals. For instance, you can tell yourself that if you are able to save x amount of money over a period of time, or secure a new client, etc, then you would buy x thing for yourself that you’ve always wanted. Having this kind of reward system in place would motivate you towards meeting and maybe even surpassing your financial goals, win-win!
Finally, when you start to implement these tips in your daily routine, you would definitely begin to see a change in your finances, and in the emotions that you feel when you think about money, because simply knowing that you’re on top of your money game brings a certain level of peace of mind that cannot be explained. So start small, build a routine, stay consistent and grow from there.
Happy Global Money Week!!