FINANCIAL TIMES

Personal Financial Planning

Every time we usher in a new year, we make goals, plans and resolutions. Most if not all of these goals and plans directly or indirectly involve our finances. Sadly, most of us do not meet half of the goals. Financial illiteracy and indiscipline are the reasons most of us fail to achieve our set financial goals. Financial illiteracy and indiscipline is the inability of an individual to make prudent financial decisions such as paying bills on time despite having the resources and spending on unnecessary items only for them to deplete their funds before meeting the real needs.

In 2022, we must resolve and strive to achieve financial literacy and discipline in order to attain our financial goals. We will accomplish this by coming up with a SMART financial plan for the year. Coming up with a SMART financial plan entails identifying, prioritizing and scheduling the needs on the expenditure side and realistically allocating projected income to the needs. While coming up with the plan, saving for investments and emergency funds must be prioritized. While there exists many formulas on how much of our earnings we should save, we should exercise caution on the realities of time value for money. It is only prudent to save where our money continues to earn interest to cater for inflation and ensure our money retains its value. Available platforms include government

“Best practice requires regular review of 2022 plans against actual performance. Monthly and quarterly reviews will help us track and monitor performance on a timely basis instead of waiting for surprises at year-end.”

“We have many lonely people who have achieved financial success.”

securities, unit funds such as money market funds and term deposits offered by banks. Please let us extreme caution and if possible desist from schemes that promise unusual and extremely high returns above what the market offers, usually a return of 6% to 12% per annum. Best practice requires regularly review of 2022 plans against actual performance. Monthly and quarterly will help us track and monitor performance on a timely basis instead of waiting for surprises at year-end.

Disclaimer

While it is important to achieve financial success, striking a balance is always imperative. Too much unbalanced pressure to achieve financial goals may result in overindulgence, addiction or even suicide. When people’s self-worth is dependent on financial success, their feelings are determined by the amounts of money that they have. Consequently, they feel good when they are doing well financially and feel worthless when financially insecure. This a tendency that we should avoid at all costs.

Additionally, it is good to remember that money can’t buy love/friendships. We have many lonely people who have achieved financial success. We might be careful not to overwork to achieve financial goals at the cost of spending time with loved ones, and eventually become lonely and disconnected,

About the Author

CPA Frashier Nduta Muiruri is the Co-Founder and Director at Upskill Business Solutions Limited (www.upskillbusiness,com) A consulting firm offering Accounting, Tax and Audit services.