Stabilizing Your Finances in the Advent of an Economic Downturn

Everyone agrees that it is salient to maintain personal financial health. But how do you do it? If you’re anything like me and the rest of Kenya, your finances are a mess, and you still haven’t fully recovered from the effects of Covid-19. According to some economists, we are on the path to another economic downturn! So what are we supposed to do? Is there even a way to stay afloat? I’ll be discussing some tips that will help you improve your finances during inflation, an event that is bound to happen this year and in the years ahead.

Get more knowledge, and learn more about personal finance

Learning about your financial status is the first step toward improving it. On the subject, read books, listen to podcasts, and view videos. The more you understand money, the more equipped you will be to take charge of your finances and get out of debt. Here are a few books that will help you get started.

“The Millionaire Next Door” by Thomas Stanley

This book explains why most people in America think they will become millionaires, but very few do. The author argues that most millionaires are not what most people imagine them, flashy, ostentatious types with huge homes, luxury cars, and designer clothes. Instead, they’re more likely to be frugal and practical with their money. This book helps you understand how to emulate that type of behavior so that you can live a rich life without having to be rich.

George Clason’s novel “The Richest Man in Babylon”

This book gives a simple approach to understanding personal finance and money management. As old as it is, the message still lives on to date because the author gives timeless advice that is helpful for any generation.

Build a savings plan for yourself

A savings plan is the best way to get your finances in order and build up your savings. But it can be hard to know where to start when there are so many different options available.

Here are five tips for building a savings plan that works for you:

Start small

It’s easy to get overwhelmed by all the different ways you could save money, but starting small will help you focus on what’s most important. Start with an amount that feels manageable and then increase it as time goes by.

Don’t test yourself

Don’t put yourself through a financial challenge if you’re not ready. If you need more time to prepare, don’t feel pressured into setting a goal that isn’t right for you right now. This action will only lead to stress instead of results!

Set realistic goals: Building wealth takes time, so make sure your goals are achievable and realistic given your income level and spending habits. You don’t want to set yourself up for failure by taking on too much too quickly or trying something that isn’t sustainable over the long term (like investing in high-risk stocks).

Pay your dues

Set a goal for yourself to pay off your obligations as quickly as possible. Begin by making a list of all your debts, including a current advance of your income, the minimum monthly payment you must make, and the interest rate on your mortgage loan. Determine how much money you can add to your loan payments once you have all of this information.

It is worthwhile to conduct a study into debt-reduction measures, and it is critical to have emergency funds.

Create a budget for your expenditure

Make a financial plan, including a budget, to help you track your monthly income and expenses. You can use modern tools such as apps to assist you, or you can go old school with an Excel document. Check to see if you’re spending more than you earn and if you’re able to save enough to accomplish your goals.

You already know five excellent ways to manage your finances, and I recommend that you keep your personal and company accounts separate as much as possible.

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