Money success stories lie in past mistakes and the ability to learn

Live within your means. FILE 

By Isaiah Opiyo

In Summary

• Lessons galore in basic-needs wisdom tied to food, shelter and clothing.

This is the second week of the New Year. The last was full of financial challenges seen in fluctuating inflation rates and cost of bank loans.

Many households, perhaps including yours, realised on the New Year’s Eve that many financial plans were never met.

However, what is more important than cursing oneself for the poor show every turn of the calendar year is taking stock and learning key lessons.

This will give the future sense, meaning, and renewed vigour to plan, succeed, and, possibly, inspire others close to us like the children. It is lessons that will inform action when drafting New Year resolutions, including the following.

Living within means

Regardless of income, if you cannot take control of expenditures, then they will control you. To win, work with a budget to stay within means.

After ascertaining net cash inflow, list fixed expenditures such as rent, food and transport before adding variable expenses. This will help you to reduce some spending based on priority and timing.

It implies that leisure comes to the bottom of the list, without exposing yourself to a tough and painful no-frills life that borders on naivety.

Should trimming the expenditure list become difficult, consult a personal finance adviser. They can help you to put into context what you have been struggling to comprehend or doubting.

Less or no debt

Each time you spend what is not yours with a promise to pay later, the debt grows.

Walking out of debt is the wish of many but only a few succeed. Walking out of the debt hole requires a commitment to repay what you already owe individuals and institutions like banks.

Like budgeting, debt repayment must also be planned, lest it grows to unmanageable levels.

For instance, if you owe a bank a debt — usually a personal loan — that is beyond your salary income, instead of committing your full salary to settle the facility partially, you could make a repayment plan that allows a breathing room.

Borrowing from elsewhere to meet your living expenditures could leave you worse off. If this is part of your resolution, you need to work out a repayment plan that suits your financial situation.