In case you hadn’t noticed, the cost of living is going up. The price of goods and services has never been more expensive, but wages haven’t kept up with inflation. This has created a perfect storm of financial crisis for many Kenyan households. Fortunately, things aren’t as dire as they seem. With some careful planning and thrifty lifestyle choices, it is possible to tackle your finances and get a handle on your money today! Here are six tips to take control of your money, pay down debt, save for the future and start living a more fiscally responsible life.
Identify the problems
The first step to overcoming a financial crisis is to identify the primary problem that is causing difficulties. The financial crisis is generally an indication of a larger issue and to come up with long-run solutions, you have to identify the actual cause of your financial troubles.
The idea behind the importance of uncovering a specific problem is to come up with a permanent solution. Just like a leaky tap in your house; placing a bucket below it is a temporary solution. Fix the tap and the leak will stop permanently. Rather than dwelling on your stress, focus on resolving the problem that’s causing your financial crisis.
Create a budget
One of the best ways to deal with a financial crisis is by creating a budget plan. A budget is a weekly, monthly or yearly spending plan for your money that guides your spending decisions on the important stuff for you. As you create your budget, it’s important to track your expenses for at least a couple of weeks (a month is best) to objectively see where and how much you are spending.
Once you can get realistic numbers from your budget, you can review your budget critically and seek out areas where you can save. Things like spending less on eating outside, spending less on entertainment or hobbies, and taking lunch from home to work rather than buying it are things that don’t make you miserly or restrict your budget. They just allow you to go after bigger things with less stress, like paying off your mortgage.
Set financial priorities
Determining your financial priorities is essential to overcome any financial crisis. These priorities help you to make tough financial decisions such as paying off your credit card bill, paying your mortgage or saving up for house repairs for your family; setting priorities will help you solve your money troubles and get back on track. Your financial priorities should include looking into new ways to have money coming in too, like a second job, downsizing your home, or even using assets you have like a logbook to leverage financial flexibility for yourself.
Build an emergency plan
There are few certainties in life, but one of them is that something will go wrong. Your car will break down, you’ll get sick, or your home will suffer some kind of damage. One of the biggest problems facing Kenyan households today is the rising cost of healthcare and insurance premiums. You can’t avoid something like this happening to you, but you can take steps to minimize the damage and keep it from becoming a financial crisis. A good place to start is by building an emergency plan. You can do this by identifying the most common types of emergencies that affect you and your family and then outlining ways to tackle them.
Having money set aside for an emergency can go a long way toward relieving financial anxiety. However, building an emergency fund can seem overwhelming, especially one with enough to cover three to six months of expenses.
Use your budget to determine how much you can contribute each month toward savings after accounting for the expenses on your needs list.
Prioritize building up three to six months of living expenses before you start looking at longer-term savings goals.
Set up automatic transfers from your checking to your savings account
Take a personal loan
A personal loan shouldn’t be the last thing you consider when tackling your financial crisis. It should be the first. If you’re struggling with high-interest debt and want to pay it off quickly, a personal loan is a good way to do so. It’s important to know what you’re getting into, though. Personal loans can be risky and expensive, so you need to shop around and ensure you get a good deal. You can apply for a personal loan with us at Mwananchi Credit Ltd, immediately with minimum paperwork. Using our loan calculator, you can simply enter your loan amount requirement and the period for which you want the loan.
Look for ways to earn extra cash
If you’re in high-interest debt or have little saved for retirement, it’s important to get a handle on your finances as soon as possible. That doesn’t mean you need to cut back on spending or deprive yourself of the things you need. Instead, you should look for ways to earn extra cash. When you have more cash coming in, you have more leeway to tackle your financial problems.
There are lots of ways to earn extra cash, and they don’t all require a ton of effort. If you have spare time, you can use it to make more money. If you want to earn extra cash, start small. Start with things you can do from home, such as selling items you no longer need.
Whether it is by selling a possession you no longer need, babysitting, freelancing or getting a second job, everyone has an option to earn a little extra, if only you are willing to put that extra effort. Yes, the amount you make from doing these activities may seem insignificant, but don’t forget, little drops make the mighty ocean. When you are in a financial crisis, every shilling counts and no job is small. Besides, you may even discover that you like your side job enough to make it your full-time career.
Conclusion
Although it may seem daunting, dealing with a financial crisis is actually a lot easier than you think. Once you have a better grasp of your situation and the potential risks, you can make better decisions about how to handle it.
If you’re faced with a sudden and substantial financial loss, it is important to remember that you don’t have to handle it alone. Reach out to a trusted financial advisor or another professional who can help you through this tough time and make the right choices for your situation.
