Wednesday, October 19, 2011

Financial literacy

Financial literacy is the ability to understand finance. More specifically, it refers to the set of skills and knowledge that allows an individual to make informed and effective decisions through their understanding of finances.
Many youth are yet to learn about financial literacy as one of the basic skills set they ought to have for their survival in this harsh economic times.

How much money is enough? There is a saying that says “The more you get, the more you spend and the more cash you want” anonymous. Living in a society of different personalities and traits, the youth are at the danger of being pressured to believe that; if you get the first salary after searching for that dream job for many years, you should always reward yourself immensely to the extent of forgetting the past. If you haven’t heard about it what about; ‘enjoy your youth to the fullest, life is short’! This and many others are myths which spread around like a ‘burning bush’ in many neighborhoods where you find most of the youth chatting about it at their ‘base’. Looking at the other flip side of the coin, all this calls to action banners can be interpreted differently especially when finances are involved combined with your character type which might lead to a habit that might be hard to stop.

I like this phrase on my myths list “Ujachanuka!” meaning you aren’t up to date with either the current style or trends. This is a slang which is the most popular language being spoken in the neighborhood especially in the informal settlements. Youths please don’t be cheated, I know the phrase can be used in many contexts but for finances you have to be steadfast with your plans if you want to succeed in future.

I would like to share some of my list in the financial literacy ‘drop-box’. This are financial lessons you can keep with you all the time either employed or not. “You don’t have to be a certified accountant to know how spend and save money for future”. Wilson Masaka

Financial literacy - ‘drop-box’;
  • Always make budgets; before going for a major shopping.
  • Know your cash flow; don’t spend more than you get.
  • Explore different saving plans; avoid mattress accounts and open an account with a reputable institution.
  • Plan without money; so when you get the money you aren’t overwhelmed with situations, rather you execute your plans.
  • Study the market; Different streets in town have their own business trends and that includes price tags for the same commodities that your might get cheaper on other streets. Don’t compromise price for quality.
  • Keep friends who can give financial advice like how to invest etc.
  • Review you financial plans every once in a while. I would advise you to review your plans at the start and end of the each month.
  • Read literature, articles, blogs etc that involves finances.
  • Learn from your past experience; How you were doing financially versus the current status.
  • Develop a habit of saving for the future; In your monthly budget take a realistic percentage to the saving plan.
  • Have an ongoing project that will keep you focused on saving for project development.
  • Match your skills, dreams with the finances; ask yourself if the skill set acquired is enough to keep you earning more and more.
  • Keep books of accounts for your expenditure, income, saving etc; on a daily basis. You can start with a simple book keeping computer program like excel, quicken or Quick books, book and pen. It all depends with your skill set to choose the appropriate method or platform, though you can’t miss to have either of the mentioned tools despite your occupation.
  • Don’t develop habits that will lead to spending sprees; like every Friday out with friends having parties and social meetings etc. Make sure every meeting has some objectivity and plan for it financially and this is for example choosing the appropriate restaurant which you are comfortable with. You won’t be checking the bill every second a drink is served, knowing the place prior to your meeting saves all the anxiety of over spending.