How to grow your cash
Jul 24, 2014
Spending less than what you earn can be a challenge, particularly if you lack a personal finance plan.
By Sylvia Juuko
Spending less than what you earn can be a challenge, particularly if you lack a personal finance plan. What you do with your income once the discretionary expenses have been deducted is what determines your financial standing.
More so, multiplying your earnings can prove to be a challenge, if you lack the discipline to manage what you already have. Yet it is only through making money work for you that you can be able to support your current or desired lifestyle in a sustainable way.
Deploying your earnings can be done either through saving, starting a business or investing in asset classes of your choice. Given the numerous opportunities available, deciding on the best investment venture is what we grapple with daily. Before you decide to invest, you may probably need to consider some of these guides.
Mindset shift
Your mind-set could be one of the obstacles to getting ahead financially. If you have been earning through ‘selling’ your skills, making money work for you requires thinking differently from what you have been used to.
You cannot venture into something new by relying solely on what you know. Not only should you think differently, but your approach to solving issues has to change.
This mind-set shift does not come overnight, but through hours of careful study, talking to mentors and hard work. This is not a one-off, but a lifetime of learning.
Financial discipline
Amassing assets can only be done through discipline. If your current lifestyle promotes indiscriminate consumption, the same will be applicable to anything that you try to set up. Lack of discipline will prompt you to spend income generated by your business, consequently leading to capital erosion.
Further still, it is only through discipline that you are able to apply what you have learnt to your investment goals.
Find mentors
There are several people who have treaded the path you want to take. Therefore, it is in your interest to have them as your mentors. Identify mentors with a wealth of experience that you can draw from, especially that which is applicable to your context.
Engaging mentors allows you to explore how they maintain discipline, invest as well as the structures they put in place to support their ventures. Learn from their mistakes and how they overcame – their perseverance over the years and how they have solved complex situations.
Due diligence
Every idea or opportunity seems like the next best thing to invest money for a novice investor. For example, if you engaged anyone involved in an economic activity, it is always their venture that will mint money for you.
An importer of fabrics will convince you that the margins are the best in that business, while a farmer rearing goats will tell you it is the next best farming venture. On the other hand, a fruit farmer will convince you that his is the best idea, while a real estate investor will tell you it is a gold mine. They are all probably right.
However, it is in your interest that you undertake due diligence to determine what works for you given your financial position, experience, prevailing economic conditions and risk profile. You also need to know who your competitors are and the existing gaps in the market that you can exploit.
Remember, if the start-up is your side business, you are competing against people who consider their business as their lifeline with no salary to fall back to.
Capital
Once you have zeroed on an idea or investment opportunity, the source of cash needed to take it forward is critical. Using savings or a loan to invest is a decision you have to make with due diligence.
Even with research, you should bear in mind that you may have to withstand lengthy periods of uncertainty before breaking even while at the same time injecting resources. Your survival in this period should be dealt with during the planning process.
All in all, this list cannot exhaustively address the hallmarks of growing your asset base. It is simply a guide to take the process forward. Given that the ability to spot opportunities is not a skill many of us possess, you may require business advisory services to make prudent investment choices.
Nevertheless, investing time and money to study and acquaint yourself with how to make money work for you is better than making common excuses that you cannot deal with numbers.
The writer works with Bank of Uganda Personalfinance222@gmail.com
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