Financial education is a process that should begin at an early age and continue throughout life. Proper money management does not involve a magic formula to find more money. Learn how to get the most from the money you do have.
Making critical financial decisions early in life can affect your ability to attain assets.
Develop a confident attitude toward making decisions related to finances through proper financial education and increase your potential for economic opportunity.
Have a spending plan/budget and learn to live within your means.
Being financially literate means, you continually improve your understanding of personal financial issues.
Understand financial products needed at different stages of life: Participate in discussions on money and financial issues.
Most people gain their education on personal finances from personal experience: Learn early to adapt to changes that affect your everyday financial well-being.
Lack of financial education creates a barrier to participate in the international economy: Many citizens do not have access to simple financial services and are hindered from expanding their financial opportunity.
When building financial literacy, making a budget is one important way to establish a true understanding of your income and expenses. There are many budgeting methods, so choose the one that you’re most likely to stick to.
It’s a method of managing your money so that every shilling is accounted for, and your expenses (including savings) equal your income each month. The idea is that when you subtract your expenses from your income for a given month, the difference is zero; even your savings is included as a budget item.
Using this method, 50% of your budget goes to pay for necessities, 30% or less to discretionary items, and 20% or more to savings and debt payments. If you need to contribute more than 20% of your income to savings and debt, it's best to pull from the discretionary spending category.
You add up your fixed monthly expenses and divide that amount by the number of paychecks you receive each month. Deposit that fixed-expense amount into one bank account when you get paid, and the remainder goes into a second account for your discretionary spending. This approach is best if you only use cash and debit card for purchases.
You allocate your money for each spending category, then put that amount of cash in an envelope with the name of the category. When you've spent all your cash from a particular envelope, you're out of money for that given category for the rest of the month—unless you shift money from another envelope. Keep in mind that not all bills can be paid in cash.
The sooner you learn the art of delayed gratification, the sooner you’ll find it easy to keep your finances in order. Even if you can purchase an item on credit the minute you want it, it’s better to wait until you save up to afford it.
It’s not how much money you earn, it’s how much you keep!
Saving accounts with a legal financial institution can earn interest; for livestock and at times land, you spend money on maintenance.
The purpose of your emergency fund is to cover small emergencies. It's important to have an emergency fund even if you're not able to save enough money to cover big losses such as loss of your home.
Investment, even in land or livestock, helps you avoid borrowing for emergencies. The goal of financial planning is not necessarily making as much money as you possibly can and having it sit there. Create an investment strategy.