HOW TO ENSURE ONE IS FINANCIALLY SECURE.

Ensuring financial security involves a combination of prudent financial management, strategic planning, and disciplined habits. Here are some general guidelines to help you achieve financial security:

1. Budgeting:

A budget is a plan for your money. Think of it as a map to get you to your money goals. And you need a budget. It helps you track your expenses and income, and identify areas where you can cut back. You can use a budgeting app or a spreadsheet to create a budget that works for you. 

You need to make a budget today to see where you are with your money—and then keep making one every single month to get where you want to be. Create a detailed budget outlining your income, expenses, and savings goals. Track your spending regularly to ensure you stay on track.

2. Build a passive income

There are two main ways to making money: earning it actively by working for a salary or earning it passively, by saving or investing in stocks, real estate or other savings vehicles such as investment platforms. 

To help secure your financial future, look for opportunities to generate income on the side. Passive income from a rental property is another way to build wealth or find extra money to help pay off debt.

3. Emergency Fund:

Build an emergency fund that can cover three to six months' worth of living expenses. This fund acts as a financial cushion in case of unexpected expenses or a loss of income.

4. Meal plan:

 Meal planning can help you save money on groceries. You can plan your meals for the week, make a grocery list, and stick to it. This way, you won’t buy unnecessary items, and you’ll be less likely to eat out.

5. Buy generic:

Generic products are often just as good as name-brand products, but they’re usually much cheaper. You can save a lot of money by buying generic products instead of name-brand products.

6. Reduce energy costs:

You can save money on your energy bills by reducing your energy consumption. For example, you can turn off lights and appliances when you’re not using them, and you can use a programmable thermostat to control your heating and cooling. 

7. Debt Management:

Paying off your debt is one of the best ways to save money. You can start by making a list of all your debts and prioritizing them based on interest rates. Then, focus on paying off the debt with the highest interest rate first. 

Focus on credit cards and loans with high interest rates to reduce the overall cost of your debt. Also, always take debts to purchase assets and never for consumption! For instance, don’t incur debts so as to take a holiday. Save for it.

Borrowed money should be used when your gain will outrun your borrowing costs. This might mean investing in yourself—for your education, to start a business, or to buy a house. In these cases, borrowing can provide the leverage you need to reach your financial goals faster. 

On the other hand, using credit for a lifestyle you can't afford is a losing proposition when it comes to building wealth. And the added interest expense of borrowing further increases the cost of the lifestyle.

8. Savings and Investments:

Establish a systematic savings plan. Consider different types of investments, such as retirement accounts, stocks, bonds, and real estate, to help your money grow over time. Diversify your investments to spread risk. Avoid putting all your money into a single asset class or investment. 

A diversified portfolio can help mitigate potential losses. In addition, setting a savings goal can help you stay motivated and focused. You can start by setting a small goal, like saving 5000 shillings in a month, and then gradually increase it over time.

Making money is one thing, but saving it and making it grow is another. Financial management and investing are lifelong endeavors. Taking the time and effort to become knowledgeable in the areas of personal finance and investing will pay off throughout your life. 

Making sound financial and investment decisions is important for achieving your financial goals. Stay informed about personal finance and investment strategies. Continuous learning can help you make informed decisions and adapt to changes in the financial landscape.

9. Insurance:

Ensure you have adequate insurance coverage, including health, life, disability, and property insurance. Insurance can protect you and your family from unexpected financial setbacks. If you own property, make sure you have the appropriate homeowner’s insurance and renter’s insurance if necessary. 

A surprisingly high number of people are tempted to skimp on insurance but keep in mind that having it protects you from potential catastrophes that can create a sinkhole in the best laid financial plan. You can save money on insurance by shopping around for the best rates. You can compare rates from different insurance companies online or by contacting an insurance agent or broker. 

10. Retirement Planning:

When you're in your 20s, retirement likely seems a lifetime away, and planning for it may be the last thing on your mind. If you can take a few steps now to start saving, compounding will work in your favor.

 Even a small amount saved early in your life can make a big difference in your future. Building a retirement nest egg becomes more difficult the longer you wait. 

Try setting up automatic monthly contributions to a retirement plan, such as an employer-sponsored scheme if you have access to one, or an Individual Retirement Account if you don't. You can increase your contributions when your income rises or when you've achieved more of your short-term goals.

11. Career Development:

Look at yourself as a financial asset. Investing in yourself will pay off in the future. Your skills, knowledge, and experience are the biggest assets you have. Increase your value by continually upgrading your skills and knowledge and by making smart career choices. 

Though this investment often starts with going to college or a trade school, keeping skills up to date and learning new ones that are in high demand can help make you a more attractive and higher-paid part of the workforce. Investing in yourself should continue over the course of your lifetime.

12. Live Below Your Means:

Keep your standard of living below what your earnings can accommodate. As you advance in your career and gain more experience, your pay should increase. 

But rather than using this excess income to buy new toys and live a more luxurious lifestyle, the best move is to put the money toward reducing debt or adding to savings. If the cost of your lifestyle lags behind your income growth, you will always have excess cash flow that can be put toward financial goals or an unexpected financial emergency.

 Avoid lifestyle inflation. Just because you earn more doesn't mean you need to spend more. Living below your means allows you to save and invest for the future.

13. Estate Planning:

Plan for the future by creating a will, designating beneficiaries, and considering other aspects of estate planning. This ensures that your assets are distributed according to your wishes.

14. Tax Planning:

Be aware of tax implications and take advantage of available tax benefits. Consult with a tax professional to optimize your tax strategy.

Remember that financial security is a gradual process, and it requires commitment and consistency. Regularly review and adjust your financial plan as your circumstances change. Consider seeking advice from financial professionals to tailor a strategy that suits your individual needs and goals.