PERSONAL FINANCE: Live smart, save big!

Do you live smart? Think about the way you spend your money, and consider this: Many of our financial issues arise because of our lifestyles. We live, eat and exist a certain way, and therefore spend a certain way. When we are not intentional about spending, it can get out of control.

We do not like addressing our spending because we assume it will mean sacrifice and restriction. However, to achieve your goals, you will need to make some sacrifices. To do this, you will need to live smart every day.

So how can you live smarter? The first thing you need to do is live below your means. If you can afford to live on Sh100, 000, live on Sh70, 000. All your expenses must always be lower than your income.

A smart way to do this is to deduct your savings and investments money before you start spending. Once you have done this key thing, the next step is to focus on your spending.

You have many bills to pay. There are essentials like rent, utilities, house helps, food and school fees. In addition, there may be other suppliers who take your money, such as taxis, boda bodas, clothes vendors and so forth. One way of being smart with these expenses is to pay them (or at least majority of them) in the same time period. We get into a lot of problems when one payment is on the 30th, the next on the 10th, the other on the 15th and so on. You see, between the 30th and 10th, we are very likely to be tempted to spend on non-essentials because there is money in the account. As we go about our day to day we are very likely to conveniently forget the bills that have not yet been paid. We can easily be sidetracked by some glossy looking item. When you get paid, pay all your bills together. Take the hit in one go. This will stop you from lying to yourself that you still have a lot of money. The bills may not all fall due at the same time, but pay ahead if you need to. Try to fit all your suppliers into this schedule. Remember, you will also save on transaction charges if you do it right.

CARRY CASH

The third thing you need to do is let go of mobile and card payments, and use cash. Plan your day-to-day spending for a week and withdraw only the amount of money you need for that week. Refrain from withdrawing any more than that. You will not die. I have a friend who has a separate line for mobile money transactions. She does the transactions she needs to do and then stows that phone away, only to be seen when it is time to pay the next round of bills. Her normal line has not been enabled for mobile money. Not only does this also save you transaction charges, but it also makes you intentional about your spending because you have to think about it.

Lastly, be smart about when and how you shop. Some items, such as food and household goods, are significantly cheaper at wholesale shops or in markets. You may also need bigger items like electronics, a car, new furniture and so forth. Start shopping around and comparing prices early, and putting aside money now. Take note of shop and car boot/home sales so you can snag these items at significantly cheaper prices. Take your holidays in the low season, or contact a travel agent and book early in order to get cheaper prices. We pay hefty premiums to purchase things immediately we want them; if you practice delayed gratification, you will save money. Remember, you put in a lot of effort into earning your money; you might as well get the most out of every shilling.

Waceke runs a programme on personal financial management and wealth creation. To sign up, email her at [email protected]| Facebook/centonomy or go to www.centonomy.com