Start Your Financial Journey On The Right Foot
Mar 14, 22
By Amanda Yusto Eseko – NMB Employee
One time, I was having lunch with fellow colleagues who had the same job description as me. I was mostly focused on the meal until one colleague mentioned that he happened to see his account turnover as he was studying his bank statement. He followed to say that he could not believe how much money went through that account. As I joined others in laughter, I could not help but wonder how much my account turnover would be. Surely, I checked! Imagine my surprise when I noticed how much my account turnover was. Jokes! But the figure was not funny!
An account turnover is simply the total amount of money that has been routed through your account over a period of time. This means that the total turnover reflects exactly how much you have earned/received through that period. Your account turnover could be the start to hold yourself more financially accountable.
To hold yourself more financially accountable, I believe that you should not only keep track of your expenditure but also of your earnings. This is guaranteed to pave the way for effective financial management since you can self-assess what you save against what you earn. Here are slight adjustments that will help you manage your finances better and achieve your financial goals:
1. Plan your finances
Take time to reflect on your life aspirations – what you need and who you want to become and plan your finances accordingly. Saving with goals can serve as a motivation. It will give you a slight sense of accomplishment each time you put away a fraction of the money you have earned as a commitment to your future goals. And every time you want to spend that money, you can reflect back to the reason you saved it in the first place.
“Financial fitness is not a pipe dream or a state of mind it’s a reality if you are willing to pursue it and embrace it.”
- Will Robinson
Planning your expenditure by having a monthly budget is another way to bet positively on your money. Having a plan for the amount of money you are about to receive, helps manage your emotional spending and builds financial discipline.
Best for last; come up with an ‘earnings formula’, one that will help you save every extra penny you make. What do I mean? Say I have a side hustle and decide 30% of my salary and every extra shilling earned, depending on what I am saving for at the time, will go to investments like fixed deposits and savings accounts, 30% goes to purchase of a Lexus new model, 30% goes to building my dream home and with the remaining 10%, I can satisfy my wants. Then, for any extra income I receive , this is how I will use it. This is different from a budget. You budget against your monthly salary (i.e. sure money) and create a formula for uncertain money to ensure it is put to good use.
2. Make use of savings accounts
Earn interest on your savings. The goal is to make your savings work for you! There is an implicit cost to having money sit without earning anything. There are two facets to this. First, separate your saving accounts from your daily transaction account. Your salary account should NEVER be used as a savings account. You have lost that battle before it has even begun. Second, have a savings account or accounts. Yes, you can have multiple where each has a specific goal. Don’t put your savings in cash or in a piggy bank. That money is too accessible and thus subject to temptation. NMB serves you with a saving account; Bonus account that is designed to prevent you from withdrawing your money whenever you want
Auto transfer money from the salary account to the savings accounts to limit access to it and to avoid self-generated excuses. Visit one of our branches and request for a Standing Instruction (SI).
“One successful writer said he would never be a millionaire because he liked living like one too much.”
― David Halberstam, The Powers That Be
3. Diversify your investments
This sounds typical but I’ll say it anyway: Do not put all your savings in one type of investment. Establish your investment portfolio which will suit your risk appetite. Remember, the higher the risk, the higher the returns; and even though you thrive off the risk, please take calculated risks! The best portfolio has instruments with all risk levels: high, medium, low and risk-free, and also tenor levels: short, medium and long term. While you are investing, do some research on investment opportunities in the market and learn how you can earn the most from them. Diversify between bonds, shares, emerging markets, non-depreciating assets, interest-bearing products with commercial banks. NMB has a unit; Security services, dedicated to assisting customers in accessing securities that are available in the market.
“Diversification is a safety factor that is essential because we should be humble enough to admit we can be wrong.”
