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
wahomengari@citadel-africa.co.ke
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