Growing up, many of us were never taught how money works or how to use it wisely. From the first income earned (whether employed or self-employed) a significant number of us blew ALL of it, convincing ourselves that there is more where it came from.
The consequence of not being financially literate is a lot of costly financial mistakes made by many young people i.e. high levels of bad debt, zero savings and a lot of “I want to need it”.
Saving money for rainy days for example is a concept we’ve heard countless times, but many people still do not do it for a number of reasons – I do not have enough money available to start saving, I’m an impulsive spender and it is hard to save money.
Granted that saving money is not easy, the danger however, is that if we do not learn how money works or why it is important to save, it is likely to cost us more in the long term.
Therefore, in 2020, I challenge you to be intentional about learning about money management and this is how you can do it.
Learn how money works and develop SMARTER financial goals
A great starting point will be reading personal finance books by authors such as Mapalo Makhu book, You’re not broke, you are pre-rich or Warren Ingram’s Become Your Own Financial Advisor to get your financial literacy skills right. These will provide you with valuable lessons around how money works and how to manage it e.g. time value of money and compounding interest.
If you are not much of a reader, you can listen to podcasts such as #MoneyModay with T-Kay and Toby and attend personal finance workshops and master classes hosted by local companies such as TKO Consultancy.
Moving on, the next step of the journey is defining and setting financial goals you wish to achieve. Goal setting is an important exercise, because it helps us focus. It is important that our goals are SMARTER (specific, measurable, actionable, risky, time keyed, exciting and relevant).
An example can be, “I want live within my financial means in 2020 by reducing my monthly expenses by 10%. I will start preparing honest and realistic budgets starting 1st February 2020 and will reviewing the budget monthly”. The road to financial well-being is not easy, but it doesn’t have to be painful either. It is therefore important to have fun when pursuing your financial goals, celebrate the milestones achieved and reward yourself, RESPONSIBILY.
Increase your sources of income
The truth is that our salaries are under extreme pressure, especially with the increasing cost of living. Relying on only one income stream is extremely difficult when trying to make ends meet and will most likely frustrate us. Let’s face it, we each have a set of skills that we can monetise if we are intentional and determined.
Some of us are great speakers, amazing sales people, singers, knitters, teachers/lecturers, tutors or designers, writers or content creators. Why aren’t we using our skills to generate additional income? So many of us are complaining about not earning enough money, but aren’t exploring opportunities to increase our sources of income.
I use my skills whenever possible to generate additional income e.g. I have been a part-lecturer for the last 4 years and this income has helped me achieve a number of my financial goals. What skills do you have that can potentially earn you additional income?
Start saving money- start with what you have
I’ve met a lot people who constantly complain about not having enough money to save. The misconception that we need to have a lot of money to start saving is so disheartening. I usually tell people that you can start saving with the little that you have, be consistent and gradually build every month e.g. save just M50.00, gradually grow it by M50.00 every month.
Better yet, there are some easy ways to save money for example; using the bank your change savings pocket option from First National Bank (FNB) Lesotho. This allows you to save money with each swipe. If banking with Standard Lesotho Bank you can also explore their savings products such as the Pure Savings account that helps you set a savings goal and track your progress.
I’ve also discovered another saving vehicle from Nedbank Lesotho for those trying to save for retirement. This account comes with some tax concessions; it is however important to do your research, consult a tax advisor and make sure you thoroughly understand the terms and conditions, interest and how the money is invested. Anything retirement, we want capital growth.
For people who have more money available to save monthly e.g. M1000.00 considering interest bearing savings vehicles such as a Money Market unit trust can be a viable option. A unit trust is a fund that pools different investors’ money together, invests on their behalf and provides a return (interest) of up to 9% per annum (depending on performance). Unit trust accounts are available from asset managers such as STANLIB Lesotho.
If as a group (friends, colleagues and families) are looking to save money together and looking for a convenient and safe method, then Vodacom Lesotho Mokhatlo Savings account can help you achieve this. It allows you to pay your contribution at your convenience and is secure and transparent. We all love transparency when it comes to our money right? It is however important to note that this account currently doesn’t bear interest, so make sure you understand how this works and if unsure ask.
Final thoughts
I know that saving money and taking our personal finances seriously can be difficult and boring, but I challenge us to be intentional in 2020 and set ourselves SMARTER financial goals.
I will also emphasis the importance of doing thorough research, asking difficult questions and reading the terms and conditions before buying any financial product. If you are unsure at any given time, speak to your financial advisor and verify.
Let us educate ourselves about how money works, master the art of saving and work hard to grow our money so we can start investing. Like Vader says, let’s start with small amounts, stay consistent and watch our money grow from lisente to makholo #Savings #Lesotho #TruthsAboutMoney