Practical life skills should be a mandatory module in schools. When you graduate college/ university/technical institution, it's more or less like you are enrolling into your sophomore year of adult school. One important life skill that needs to be taught is personal finance. A majority of people live frustrated and somber life because they have no idea how to manage money. Lack of personal finance knowledge is one of the major causes of relationship/marriage failure. Personal finance management and personal financial planning should also be taught at home at a very early stage in a child’s life. In most African homes the only money theory that children know is “ You can only get money when you are an adult because that is when you are eligible for employment”. This is why most children run on the mantra, “when I grow up I will have a lot of money”. Teach your children the strategies to make, plan and manage their finances.
Personal Finance Defined.
Personal finance refers to how one manages their money as an individual or family. It includes how one saves, invests, and sets their budget.
Having not been taught about personal finance in school should not be an excuse for not learning how to manage your finances now. Learning is everlasting and there are so many ways to learn outside of school through books, podcasts, YouTube, mentorship as well as online courses. One good podcast that can help you with your personal finance in Zimbabwe is the Mari podcast by Kudzai Mubaiwa.
Some of the basic principles on personal finance that we should learn to manage are:
Building an emergency fund.
What is an emergency fund?
An emergency fund is money set aside for life’s unexpected events. People also call it a rainy day fund. This money is intended not to make you feel the financial strain you would have felt if you had nothing set aside. The covid-19 pandemic was eye-opening for many to have emergency funds. The amount of money you should have in your emergency fund is subject to the individual, but most financial experts suggest you start with $USD1000 to 3-6 months of your monthly expenses.
what are the benefits;
- Reduces stress levels in an emergency
- It encourages a saving behavior
- It prevents from entering into debt, which would have resulted in more problems in the future.
- Helps you focus on creating solutions in other areas that are not financial during an emergency.
Having Multiples income streams.
Whether you are a business owner or employee, having one stream of income is a trap and does not grant you financial freedom. Life is unpredictable, if something is to happen to your income stream, would you have something to fall back on or sustain you while you get back on your feet. One income stream encourages the hand-to-mouth type of lifestyle. It's difficult to save or build an emergency fund with one income stream because you are using that stream to cater to all your expenses. No matter how huge of a sum you get from that income stream, expenses always have a way of being at par or surpassing your income. Having multiple income streams helps you reach your financial goals and build wealth.
Investing.
Investing is simply taking a part of your money and trying to make it grow by buying products that might increase in value over time. This is usually a misunderstood subject. People tend to think investing is only for the rich, but investing actually helps one build wealth. You can learn more about investing in Zimbabwe on the Mari podcast and zse.co.zw
Comments