TWS|| Wallet Wisdom_With Wahome Ngari.
At a personal level there are a number of uncertainties that need to be managed using a combination of risks assumption, risk avoidance, risk reduction or risk transfer.
There are many times when you find that you are living on the last pay cheque or even worse on the next cheque, the month tends to be longer than the money, you consistently spend more than you earn month after month, you are saddled by a mountain of debt because you always borrow to get bye or you do not have any savings for the future.
Your life turns out like taking permanent residence at a viewpoint or the edge of a cliff. This is a terrifying place to think of as a residence because you live under constant fear of going under. Uncertainties are your common companion, you are numbed by the thought of emergencies but life is full of unexpected events and happenings which affect your finances.
These emergencies which can take you under financially may range from abrupt sickness of a family member, involvement in an injury causing accident, arrest by traffic police for over speeding, arrest by city askaris for dropping a bus receipt, break down of a car on the road, being separated from ones income, freak fire at our business premises and many such other happenings.
These emergencies do not give a notice but when they come they demand immediate attention and cash is required. If the cash is not available then one is forced to either take expensive credit (one more reason why shylocks are in business) or sell valuable assets in a hurry for less. Is there a way of managing these uncertainties? Yes there is. It requires that you set up an emergency fund, a Contingency fund, a personal safety net.
The Safety Net
A safety net is a personal fund for financing emergencies to avoid unplanned borrowings or disruption of established budgets, it will replace income in seasons of unemployment or business down times and it will bridge the financial gap during financial emergencies.
This is not a fund to finance holidays, school fees, entertainment, purchase of furniture or electronics or such other mundane budgetable expenses. The fund should be able to take care of your expenses for up to three months (preferably up to six months). This fund is the only way to turn the situation around and allow you to walk away from the edge of the cliff, a step at a time.
Setting up such a personal safety net is not easy; it is like eating an elephant for lunch. It takes courage, vision and discipline and can only be done one bite at a time. Setting up a personal safety net is very possible and practical. In the next post I will take you through how set up a safety net for yourself, and how to finance it.
If you need more help, ask us about the Wealth Creation Masterclass where such wallet wisdom is shared and such concepts are taught. C.A.L.L Wahome Ngari – The Principal Consultant/ CEO, Citadel Consulting Ltd on 0724 888219 or drop him an email at email@example.com
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