Why is Financial Planning & Awareness Important?

Writing inspiration didn’t come to me this week. Maybe because I’ve been feeling both physically and mentally fatigued. I want to fill that leave form and ask for 1 week off, but I’ve been wondering if that will be a waste of my leave days. Ideally, I’d want to spend my leave days in Kenya, eating githeri with avocado for breakfast, lunch and dinner. The thought of getting leave days and spending it indoors feels like a waste.

Do you see why financial freedom is a legit life goal? If I had enough money, I’d just take a few days off. Without having to fill leave forms, submitting them to my supervisor, to whom I have to explain why I need to recover from extreme mental fatigue. Then submit to HR and just keep showing up at work while crossing my fingers hoping that it’ll be approved. Universe, till when?!

God, I miss exploring the hills and mountains in our beautiful country and being rained on while at it.

Anyway, since inspiration didn’t come to me, I went looking for it. That’s the downside of being dedicated to consistency and promising your readers that you’ll always publish something every Thursday. Whether you feel motivated, inspired, excited or not, you have to keep showing up. But once I hit the publish button, the excitement overtakes the feelings of demotivation as I start looking forward to interacting with you all.

So, I went through all my 25 previously published articles to get an idea of what I haven’t written about so far. Then it hit me that I haven’t written the obvious; the benefits of financial planning and financial awareness. Like how did I miss that? Eazey, I got you covered!

Benefits of financial planning & awareness

1. It keeps you motivated and committed

One of my clients that I guide in her personal finance journey has been wishing to take up a specialization course that’s in line with her career. When she checked the price a few years ago, she immediately concluded that she couldn’t afford.

After 3 months of recording and tracking her expenses and prioritizing which debts to pay based on urgency, she says she now knows that it’s possible to take up that course. She uses this dream as a motivation to stay committed to the journey.

Using spreadsheets to track and plan your finances enables you to visually see how much progress you’re making. It shows you what’s possible now, in a few months, and what you can do in future.

I still have the spreadsheet I used to get out of debt. I had colour-coded it and used to cross out names of people and organizations (read, blood-sucking mobile money lending devils) that I owed. As opposed to deleting the names, I crossed them out. It’s a constant reminder of what’s possible when you’re committed.

Sometimes when I find myself in those negative self-talk cycles,(yeah, it happens to the best of us) I use this excel sheet to remind myself of how far I have come.

2. Reduces anxiety

The uncertainty of not knowing if you’ll afford your next meal or pay basic bills, let alone have enough left to save is daunting. If you add debt to that equation, life feels unbearable.

Since I resumed paying my student loan in April ( I had stopped because I just could not afford to!), I feel less anxious about my financial trajectory. I know that as long as I’m employed, I can keep paying $100 every month consistently. As much as it still accumulates 4% interest on the principal every month and it pains me to see that figure when I look at my statement, I know I’m in control. That in less than 2 years, I’ll have paid it all off.

Having an emergency fund works the same way. You know that if shit hits the roof, as it often does, you’d have a few months of safety as you figure out what to do.

And let’s not forget status anxiety. That so and so seems to be doing better than I, according to her new social media post. Financial planning and awareness will enable you to recognise that whether they’re doing better or not, you have your own unique journey.

Over the past few years, I’ve learned that to be good with money is like a good long-term relationship. Instead of everything being chaotic peaks of highs and lows, there’s a more quiet, sustained happiness that allows you to plan for the future, feel safe and comfortable, and really figure out your life. — The Financial Diet by Chelsea Fagan & Lauren Hage

3. Dismantling the shame

As time goes by, I’m becoming more and more comfortable with having conversations about money. Comfortable with admitting that yes, as a child, I experienced poverty. That at some point in my life, due to lack of knowledge and support, I was in debt. Admitting that I don’t know everything about investing, but I’m learning every day. That I cannot afford a lot of things. That sometimes I can’t sleep as I worry about my family and what would happen if I lost my job and couldn’t secure another.

I wish the same freedom for you. Especially to be in a place where you’re not ashamed to ask for help when you need it.

Btw, I saw a mindblowing tweet the other day.

The opposite of wealth is not poverty. It’s justice. — Wanjiku Kang’ethe

This shows that a lot of the poverty that people experience is a systematic problem. It’s due to failure by the government. Seriously, we shouldn’t have to worry about basic healthcare when we pay taxes. But here we are.

Understanding that my experiences with money are tied to a flawed economic system, as opposed to personal failing, was life-changing. -Tahira Alexander Green

So, for the most part, you’re not to blame for your money predicament. Dismantle the shame. Speak about it. Seek help.

Is this a good time to remind you that I do personal finance consulting? Halla agatha@thewealthtribe.com

4. Enables you to fund your passions, dreams and desires

How many things are you passionate about? Because yes, over the course of your life, you will have many passions, dreams and desires. They keep changing as you evolve.

I’m passionate about books, deep and raw conversations, writing, personal finance, hiking, travelling. 2 years ago, personal finance was not on my list. All I knew is that I wanted to be rich; that was my typical reply if you asked me what my financial goal is. I already told you that’s not a goal, right?

One of the things I’ve been reading about of late is how to plan affordable vacations because I’m not about to wait till I’m 40 to experience my dream destinations.

Budgeting, living below your means, saving, investing enables you to fund your passions, dreams and desires. It helps you to know what matters to you as opposed to copying others and being heavily influenced by external forces such as the marketing industry.

5. You know if you’re living beyond your means

Are you living beyond your means? How do you know when you’re living beyond your means?

My budget categories inform me when I’m about to or when I’m living beyond my means.

For example, my Food & Groceries budget is $136 per month. Since I record all my expenses as soon as they happen on the Toshl Finance app, I can tell if I’m living beyond my means by looking at the total of that category. The app adds app the categories when you record and gives you a snapshot of your total spending for the month by category and by date. It has made my financial life such a pure bliss!

Expenditure is visible. But unfortunately, financial prudence is not. Bragging about how good we are with money is not only socially unacceptable, it is not impressive- in fact, many people will humble-brag by pretending they’re bad with money while they’re not — Rookie (Kellie)

6. You get to experience peace of mind and contentment

One of my favourite mini experiences is the feeling I get when I walk into a shop, look at stuff, know that I can afford them and still not buy them because I don’t want to lose or mess up my financial plan.

There’s also stuff that I see, realize that I can’t afford but with my current trajectory, I’ll soon be able to afford.

And of course, there’s the stuff that I see and I know for sure I’ll never be able to afford even in a million years because I’m not Jeff Bezos of his ex-wife. I’ve made peace with that.

7. You get to know the gaps in your financial knowledge

You don’t need to know everything about personal finance to begin taking control. You also don’t need to know everything about investing to start investing. In fact, waiting will hurt you more because…you know by now…the power of compounding!

When I created a personal finance roadmap for myself to help me track my progress all the way to old age, it made me realize what I know and what I have no clue about. I also learnt what I have no interest in learning because consulting a professional is better.

So yes, when you start your personal finance journey, you’ll soon realize that it’s like a puzzle. You hack it by solving one piece at a time. And delight in the journey while at it!

Oh yeah, I shared the finance roadmap ( I assure you it’s for total beginners) here to help you do the same. You’re welcome 😉

8. You can practically plan to increase your income

You want to snowball your way to earning more in future. Upskill yourself in order to increase your ability to earn.

I’m I the only one who gets suggestions to these clickbait articles about how a housewife won a million dollars or how somebody did ‘this thing’ and made a million? Or is it because Google is always listening to my conversations? How long should I fast? Lol

Financial planning and awareness enable you to practically plan how you can increase income without feeling discouraged or distracted by such online millionaire stories.

I do this by asking myself ‘what is the one tangible way I can increase my income in the next 6 months?’ every end of the month when I’m auditing my finances. Then practically and consistently work towards it.

Another method is through negotiating for a raise at your workplace. I recently learnt about Glassdoor which is a ‘website where current and former employees anonymously review companies. It also allows users to anonymously submit and view salaries as well as search and apply for jobs.’

Go there and find out if you’re paid fairly. With that info, you’ll be empowered to negotiate for a raise or plan a career move if your current employer is taking you for a ride. Also, leave a review of your company and state what you’re paid so that we can all thrive!

9. You get to understand other people’s struggles

Is it just me who became conscious of the word ‘privilege’ just recently? Yes, COVID-19 has taught us a lot about privilege and broken systems. At the end of the day, we’ve seen many ‘people, place and time’ based stories which make their struggles relatable. And this calls for empathy and helping as much as we can.

Financial planning enables you to do that. When you have a ‘giving back’ budget per month, you’re able to help while also ensuring that you’re covered.

10. With time, you get to build frameworks to base decisions your financial decisions

By looking at my budget for the past 3 months, I realized that I haven’t been spending any money on fun & entertainment. I’ve also been spending very little eating out. So, I could finally redirect this budget towards furnishing my house.

We spend so much time indoors now so it makes sense to make your house a little heaven. It’s a legit source of joy because hey! Life is for the living.

This also works while building investment knowledge.

The four golden rules of investment management

Eliminate vagueness in your financial life. Take control and do the most to reduce uncertainty one step at a time. Sawa?

Wondering where to start? The below roadmap is a perfect guide.

Originally published at https://www.thewealthtribe.com on July 9, 2020.

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Your voice of reason before you blow all your money this weekend! www.thewealthtribe.com

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Agatha from The Wealth Tribe

Agatha from The Wealth Tribe

Your voice of reason before you blow all your money this weekend! www.thewealthtribe.com

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