Neglecting financial knowledge/intelligence :
Not many people are willing to learn the rules and principles of money and money management. Parents in homes expect their children to be taught about money at school and yet the school system doesn’t teach that. Those that are poor doesn’t want to learn from the rich who know how to make money and how to manage it and yet they desire to be rich
You need to invest in financial knowledge. You can take free online courses on financial planning, management , or personal finance, etc. You can use www.coursera.org or www.educba.com
No financial planning
Most people do what I call, “Stumble spending”. They unexpectedly buy something which in their minds they never planned. Not many make budgets for the month. They just have the information in their heads, so when their minds erases what they had planned, they just follow what their minds has shifted to.
Have a proper plan on your money. Plan your short term, medium term and long term finances. Don’t just budget for today or the month but for years ahead. Many people were caught unawares financially by the Covid 19 crisis, because they had not planned for an emergencies. Most probably had a few dollars to last for the remainder of the month, some even spend their money the first week of the month. The reason why so many people want to borrow money and the more there are not many enough banks, credit houses or fintechs organizations to cater for the gap.
Spending the money you don’t have
Never be deceived to spend the money you don’t have. You have often heard that you should live within your means but I prefer to leave below my means. This is because is if my means is 1000 and then I spend the whole amount then I have failed still. Most start to borrow goods or money in anticipation of that which is to come and when it comes it has already been spend.
Ensure you live below your means so that you can have extra left
Spending all that you have without saving
Most people fool themselves to believe that saving is not possible if you don’t receive sufficient money. Always remember that the things that you want may always be higher in value than your financial needs so be content with what you have at that moment while you upgrade your income.
It’s possible to save a certain percentage of every income that comes to you. It’s a discipline and it helps you develop a mindset of always having money. So stop spending all the money you get and save some.
100 percent spending and 0 percent investing
Whenever many people hear about investing they think, people want to steal their money but they are so free and relaxed when they are spending on something that never multiplies their money. They can take risks in spending but they can never take risks in investing
Ensure that you invest from your savings so that you don’t rely on one channel of income. Ensure also that you invest in something you are willing to learn, invest in something you understand.
Reliance on one channel of income
You have heard a saying, “ Never put all your eggs under one basket”. Imagine during this Covid 19 crisis, you were working as sales person for an air tickets agent. Assuming that it was your only job and that’s all your income comes from. Suddenly your job is gone and you are now at home. Its means no income is coming. These kind of situations can be avoided by creating multiple channels of income
Hilary Kutama is the founder of Wanamari a fintech organization that helps startups to access capital and help any everyday person to invest within their means.
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