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How to come up with a solid financial plan during this economic recession

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A few days ago I spotted some pictures on Instagram that left my mouth slightly dry. I had trouble flitting my eyes from the sunset photos; the blend of orange and gold was simply stunning. It was not easy tearing away my gaze from the jungle beasts who almost seemed as if they had cleaned up for picture day. Then came the assortment of delectable foods; dishes that looked as if they should be behind a glass in some snazzy museum.

The posts seemed so surreal especially with the current economic constraints. In fact I kept glancing at the dates, trying to see whether these were taken a while back way before the financial belt tightened. No, turns out a family of six were actually on vacation in Maasai Mara Game Reserve during a time when most Kenyans are swimming in dry pools of money.

How is it that, while some people always seem to have an influx of cash throughout the year, even when the money is estranged countrywide, other people are always queuing for bank loans?

Planning ahead is not easy especially when you have financial obligations and with sudden economic recessions, one might find themselves having to choose between basic needs. It’s either a roof over your head or food on your table. No one wants to make this choice. In fact, we all want to take a breather in that new solar-powered game drive vehicle that everyone is gushing over. We want the tranquility that only chirping birds and migrating wildebeests can provide.

So how then do we battle recessions? How do we bravely take on retrenchments? How do you ensure that your investment doesn’t go belly up? What about your looming debts? How do you survive during a time when money is getting really good at playing the game of hide and seek?

Create a feasible financial plan. Sounds simple enough right? Well, it is not necessarily easy to come up with a financial plan and adhering to it is even harder but if you manage to successfully do this activity, you will wind up having a financial cushion that you can relax in when things get tough.

When the economy lunges lemons at you, build a flashy stand and sell tons of lemonade.

Budget Discipline

Remember back in high school when you used to whip up a viable timetable after a moving speech from a motivational speaker? You would get all riled up and pumped, ready to take on the world or in this case, subjects that will determine whether you will proceed to campus and what you will be doing there. The first week would be a breeze; you would follow the timetable to the tee even if it meant missing out on lunch breaks and gossip time. Then the second week would roll in and you would miss a study session here and a math siesta there. By the time you are in your third week, your timetable is haggard and forgotten as you await anxiously for lunch time with your metal plate and stolen spoon. The discipline required to stick to that timetable wasn’t just implausible, it was inhumane.

Coming up with a budget is relatively simple. It involves you sitting in front of your spreadsheet or your notebook and jolting down your expenses and revenue, juggling around how much money you should spend on a certain need and in what length of time. Then how is it that you almost always wind up not adhering to your budget?

True, there are factors that we cannot control and therefore at times our budgets take those hits. But this should not be an occurrence in the first place. A good budget should contain contingency expenses. Always ensure that after listing down all your expenses and their costs, you also factor in money for emergencies and savings.

Both these money allocations are vital. Savings secure your future (in terms of investments) and contingency money ensures you can cater for your emergencies without disrupting your daily expenses and savings.
Your budget should also have room for price hikes. Suppose you are used to purchasing three litres oil at sh 569 and prices of oil fluctuate, what then? Will you dip your fingers into the savings or contingency allocations? None of these fit that criteria of expense so it is important to leave room for these economic bumps.

Discipline breeds result, just ask Elon Musk. The person works 20 hours per day like clockwork and now he is sitting at number four in the list of global billionaires.

Cutting down on expenses

This step requires sacrifice. It means being willing to forego things that you enjoy in the name of stretching your income.

Let’s say you report to work everyday and that you spend an average of sh 100 on lunch. It’s time to start carrying homemade food to work. You would be surprised how much money you spend in a year on lunch alone, money that you could have allocated to other expenses.

Perhaps you have a car or you use public transport to go to work or varied places. If this distance can be covered by foot, it’s time you get your calves fit. Wake up earlier and start maneuvering towards your destination. Think of it this way, you will be cutting down on both your gym and transport expenses.

Household shopping takes up the bulk of our income. Purchasing food, toiletries and settling of house bills always leaves our pockets feeling a little nimble. Usually all these things you pay for are essential but there are some that you can cut down on. There is also the option of seeking out cheaper brands or brands with offers. Take your time while shopping in the supermarket. See if you can tick off everything in your checklist while still saving some cash. As I said, this step requires sacrifice and while you would rather have meat stew for dinner, it is something that you can forego and replace with a cheaper stew like indigenous vegetables or “sossi”.

Sit down with your family and if you are leaving alone, sit down with your persona and thoroughly look for things you can cut down on so as to ensure you stay afloat financially. Within a few months to a year, you will be investing those savings and you can come back to these comforts.

Insurance monitoring

After taking up insurance, most people simply lay back and wait for it to renew. It becomes an automatic expense that you do not even bother looking at twice. Truth is, there are better insurance deals out there and you do not even know about them because you are used to allocating a certain amount of money annually without comparing costs. Go hunting.
Insurance payments are important especially when it comes to our health, cars and workplace. Even when things get strenuous money wise, we cannot afford not to renew our varied insurance policies. Before automatically doing so, however, it is important to go sniffing for better insurance deals that might end up saving you money.

If you dedicate time every year to this specific task, you will find yourself tweaking significant costs that come along with insurance plans.

Debt consolidation

Let’s face it, most of our income does not even stay five minutes in our possession; we are always forwarding it to our mobile app loans. All loans, except humanoid loans, come with interests. This additional money that we wind up giving out is an added expense that shrivels our accounts and most of the time we find ourselves paying these interests rather than reducing the principal amount which is quite disconcerting.

To handle your colossal amount of debts, that often accrue a combined large amount of interests, consider taking on a consolidating debt.
This involves getting a larger loan with a low interest rate that will pay off all your small loans and their whopping rates leaving you with only one debt to pay. This will lead to less debt repayments and reduced interest payments that usually occur monthly. After you do this, come up with a debt paying plan for that single debt.

Savings, Investments and Grants

We often save with a plan of investing. Whether we want to invest in a retirement plan or a staycation with our family members and loved ones or maybe starting a company or buying shares in one; the goal here is to amass as much money as possible to fulfil an ambitious need that is not necessarily essential in the present times. Coming up with a savings plan is therefore important and a necessary step in your financial plan. Financial advisors always recommend that we save 10% of our income monthly. If possible, nudge the number to 15%.

Savings are security; you have those, your future is intact. The only way to multiply our savings is by investing. You invest, you save; you save, you invest. Then you became one of those people who can afford a safari in the middle of an economical recession.

Usually investments are a gamble. Sometimes they play out, sometimes they crumble before our own eyes. It is quite frustrating when you sacrifice a little monthly only to invest in something that will, to put it bluntly, waste your efforts. You start saying things like, “I should have eaten meat everyday after all.”

The key in investing is to do so diversely. Before digging your nails into an investment, do a thorough research, get in touch with financial experts; see all your options and pick two or three investments whenever possible. Putting all your eggs in one basket is often very precarious. Diversifying your investments will ensure you are safe once one of them goes belly up.

Youths have been idling in the country trying to figure out their next move now that schools are indefinitely closed and getting a job is even harder than ever before. Two days ago, in the county of Kitui, 16 million shillings was disbursed to 1,700 jobless youths as grants to kick off their start ups and for them to attend training seminars that will set them up with steady employment. Grants are available in each county and it is time youths take advantage of them especially during this recession. Having a financial plan ready will ensure that you take full advantage of this opportunity, amassing enough wealth to break out on your own.

Attend financial seminars and get in touch with financial advisors
As much as the internet is a reliable source, at times lifting that information from Google and applying it in real life is hard. This is where financial seminars and advisors come in. Take the initiative to attend these seminars which are offered all over the country from time to time and learn how to practically handle your finances.

Also, if you walk up to a student studying financial economics, a lecturer in that field or even a person working in the bank, you will learn a whole lot more from them on how to put your financial plan in motion. All you have to do is take this initiative.

It is never too late or too soon to whip up a financial plan. You don’t need a typhoon to hit you so that you can stop going out for drinks every night. Start creating a financial plan as early as now to secure your future and your kids’ futures.

Say, where is that one vacation destination in your bucket list?


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