I was in elementary school when I first started this habit of putting money aside for times that I felt it could come in handy. Am not really sure who taught me the concept at that tender age but am quite sure I didn't learn it in school because we were never taught money matters then. And I doubt if they've started teaching money matters in our elementary schools at present. Which is quite a shame, really, because such an education could go a very long way to help many students as they gradually ease their way through elementary and secondary schools as well as universities or any other higher tertiary institutions they may find themselves in over time. I recall always setting aside the shiny kobo coins from the not-too-shiny or clean ones that our father used to give to us every day for school lunch. In some days, if all the coins were shiny, I would ignore lunch and just put the coins away into a small basket that my stepmother had made available for me. Then, from time to time, when I felt like it, I would take a little out of my saving basket and declare a special lunch spree for my close friends then during recess. Or I'd buy a special book, toy or any other thing I'd been eyeing for a while. Nonetheless, the spirit of my childhood always eventually overcame that of a lack of maturity and before I knew it all my well saved money would be gone by the holiday season. And I would have to start all over again!!!!
I have briefly shared this experience because of something it has taught me. One, for you to be able to handle a rainy day, you need to have money saved somewhere. Two, you can't have money saved somewhere unless you PLAN TO DO SO. To have healthy finances you must be strategic in your thinking and handling of your money. Strategic thinking helps you to know where you stand financially; it helps you to know where you want to go financially; it helps you to know how you intend on getting there; and, hopefully, should show you the steps you can take to eventually get there. Strategic financial thinking is the one big missing part of most of our decisions concerning our finances. We mostly think that all we need to do is wake up one morning, make a simple decision and all will be well. Not so. We must be more certain than that. And taking stock of our true financial state is always the best way to start. Once we've identified that, we must also identify how we want to improve our finances. And one very key way is the setting aside of a little of what we already have so that we do not spend all we have at once. It can be painful and agonizing but you must commit to it (remember Part 1 of this piece) because it's the only way.
Commit to putting aside a certain percentage of whatever income you may have per time and practice the habit of ignoring whatever is set aside. As much as possible, try to apply the 30/70 Principle, where you save and invest 30% of your income and then spend (not waste) the remaining 70%. As a suggestion, half of the 30% you save can be used for investments no matter how small while the rest stay as savings or as your EMERGENCY FUND.
Listen, no matter how much money you may be making as a business owner or salary earner, if you don't learn and practice saving, you will not like your financial state months or years down the line. Strategic financial thinking demands it for you to gradually walk yourself into a healthy financial state.
I'll be seeing you in 2014. But for now, do kindly take out some time to pause and ponder on this.
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