By Sylvia Juuko
Nine months ago, the excitement associated with the New Year made you declare a fresh start in every area of your life, including personal finance management.
You probably made pronouncements related to improvement in managing money and set ambitious targets for a specified period, depending on your planning horizon.
However, you have soon realised that making projections and putting down a wish list is the easy part. The tough part is sticking to your long -term financial plans amidst the prevailing complex economic environment. In the last stretch to the end of the year, a periodic review of your finances is ideal to determine whether you are on course.
Put your financial goals in the spotlight
Dig up your proposed wish list and tick off what you have accomplished so far. Mark those areas where you have fallen short and make a critical assessment of your habits and how they have impacted on your finances.
Assuming one of your goals was to make some investment this year but your venture has not worked out, you need to consider whether the failure is premised on the fact that you did not carry out a proper feasibility study or you invested on a whim. You need to determine whether it makes economic sense to stay in that venture or cut your losses and move on.
A review of your expenditure in comparison to your projections will determine whether you are on course or not. If there are any issues related to personal financial management that need urgent fixing, this is one such area.
A keen look at your expenditure pattern will show whether priorities are upside down or on course. Since you know the trouble spots that need to be fixed regarding your fixed and discretionary spending, isolate them and deal with them.
The culture of saving needs to be developed and maintained. If by now you can’t comprehend the value of having a savings buffer, you probably cannot be saved from your financial mishaps.
Your attitude needs to change so that you can unlock the value that savings present.
Debt accumulation versus reduction
Debt has been considered a way of life. Good debt can assist you acquire assets that generate income and increase your net worth. In the same vein, debt, if misused, can send your finances spinning out of control. In this review, assess which side you are and work towards improving your debt situation with a view to reducing it if it’s getting out of control.
Deal with emotions
Take a good look at your behaviour over the last couple of months to determine whether your money habits are connected to your emotional state. Are your expenses out of control because you want to feel better or attract other people? Do you head out for binge spending because you are trying to show off a certain status that you cannot support? To avoid repeating such mistakes, identify these areas and work out how to take care of them without punching a hole in your wallet.
Learn from your mistakes
All decisions we make have consequences that may be short-term or long-term in nature. For example, if you make a decision to borrow today for consumption purposes yet your income is already constrained, you are going to face financial pressures for the foreseeable future during the term of the loan.
That makes you responsible for your situation and not your spouse, boss or whoever you have been blaming lately. Scale back to match your financial status with a commitment to ensuring that once this debt is repaid, borrowing for consumption is contained.
Plan for big expenditure
It’s inevitable that by expenditures will arise during your life cycle so you are better off planning for them.
For example, do you have schoolgoing children or plan to build a house or take a mortgage? Plan for bulk payments in advance. Another sticky point is the seasonal spending, particularly, December. Be different this year and plan for such expenditure, having in mind that major bills will be coming up in January.
Translate knowledge into action
It’s important to remember that if you have challenges related to managing money, you lack some knowledge in that area. Despite your conviction that you know all there is to know about managing finances, your balance statement should tell the story.
The writer works with Bank of Uganda