Geoffrey Kiragu, a real estate entrepreneur, has created one of the most successful real estate companies in Kenya over the past few decades. With just a handful of plots and Sh. Kiragu, an entrepreneur who started with a few plots and Sh. Kiragu shares his wealth-building tips, which you can use to improve your personal finances.
Identify your wants and needs
One shilling can be as important as one hundred million. Prioritizing your spending is key to establishing a budget and achieving financial goals. You need the things you need to live. These include food, shelter, and clothing. These are essentials, while you may have wants. But they are not necessary.
Personal finances should always be your first priority. Don’t save someone else’s money and ruin your own. You can spend more than you budgeted to help friends, family, and colleagues, but you will end up struggling with your finances.
Set your top financial goals
It is important to identify your financial goals. This step will help you understand the purpose and give you direction in managing your money. Are you looking to save money for a piece land? Do you want to be able to pay off your debts and save money for your down payment on a house? Are you ready to put aside 10% of your income to build your retirement savings? These are both short-term and longer-term financial goals.
You can set one goal for each category. However, if you find that setting longer-term goals seems daunting, it is fine. Think of the near future instead: My goal should be to save at least 20,000 for retirement. It makes it easier to break down large goals into smaller goals.
What are your “SMART” goals?
To set yourself up for success, you need to have SMART financial goals. These should be specific, measurable and attainable. They also need to be realistic and achievable. A list of possible obstacles and solutions is an important part of goal-setting. You won’t have to stumble or falter if life throws you off-track.
Make budgeting an habit
Ask any financial expert what they do to manage their finances. Budgeting is a prime example. Your budget is a set of guidelines that you create based on your income.
You will be able to have everything you need if you stick to a budget plan.
Start with the monthly income you earn – this will give you the amount of money you need to build a budget.
All of your expenses are at the other end. You can categorize your expenses into fixed expenses (rent, bills and transportation, school fees) or variable expenses (groceries and eating out),
You must ensure that your debt repayments are included in your expenses if you have debt. When creating a budget, savings, which is perhaps your most important expense should also be considered. You will feel calmer and less stressed if you get out of debt.
Track your spending
Tracking your spending is an essential step in budgeting. If you don’t track where your money goes each month you won’t know if your budget is being adhered to or if it’s going haywire. Many people don’t know how much they spend each month on groceries, shopping, and other miscellaneous expenses.
It could be a very eye-opening experience to track your spending. This could change the way you spend money. You might find out that your weekly meals cost you a lot. This sticker shock may cause you to pack twice your lunch each week.
These goals will motivate you to budget, automate savings and avoid debt.
Stocks and bonds, which can be converted into cash in a matter of days, are liquid assets. Large assets like property, equipment, or plant are more difficult to convert to cash, so it may take several months.
Start a side business
Extra income can improve your life, allow you to save money for large purchases such as vacations, and help you diversify your income streams.
Budget for miscellaneous Items
To ensure that these expenses are included in your budget, you can brainstorm them at the beginning each month. You can also review your budget regularly to add any new expenses.