Financial literacy enriches a society - Daily Nation

Financial literacy enriches a society

Thursday November 29 2012

By PATRICK WAMEYO

Financial literacy just like shelter, food, and clothing is a common good. It is needed by all people and if possible, it should be provided by the government to all citizens for free.

A society that manages its financial resources well enjoys quality life. To achieve this benefit, each household must draft and roll out a quality life improvement plan.

The plan starts with determining your goals and developing a simple work plan.

Developing personal or family goals is usually scary for many people especially in the middle and lower income categories.

Just ask yourself, what do I want to do and how much money do I need for that? Make some list and set up a budget.

Once you have visualised how much you need to live that ‘dream lifestyle’ reflect it in your budget and work to meet it.

Along the way, set up an emergency fund — an equivalent of six months of your bills.

As you begin your journey to the desired lifestyle, pay off bad debt as a priority, say, your credit cards and other high-rate revolving debts.

Start by paying the maximum amount on the credit card with the highest interest rate and the minimum on the cards with the lowest.

This cuts interest growth that could slow your effort to develop a good credit rating.

Having good credit is an asset for growth. As the debt load reduces and more cash flow is released, start savings.

Consider automating your savings plan by setting up an automatic transfer between your salary and savings accounts each month.

While employment is the primary source of income for many households, it is becoming a redundant but stable source of income in today’s society.

Start a business offering services in something you love doing, initially on a part-time basis. And also begin honing your investing skills.

Traditional investments like the stock market, real estate and even farming offer real opportunities even for those with small income.

Remember, success will not come overnight. Habits create small achievements daily, that together post big scores and a financially literate character.

Patrick Wameyo is a financial literacy educator and coach