Last Monday, I was so tired and all I wanted was a hot shower followed by a good movie. So, I decided to go home a bit earlier than usual. I took to the steering wheel heading home. But I should have guessed better; there was no electricity at home and so it meant neither the hot shower nor the much anticipated movie.
Going past my sonâ€™s bedroom, I saw my six-year-old son perusing through the Weekend Nation paper using a lamp. â€˜Dad this is you,â€™ he called pointing at my picture on the â€˜Personal Financeâ€™ column while bringing the paper closer to me. â€˜I see you every Saturday on this page, what do you tell people here?â€™ The question caught me unawares.
How I answered my sonâ€™s question is outside the focus of this discussion, but what struck me was the fact that I had never sat down to seriously discuss personal finance issues with my family. I would normally show my wife the articles before I send them out for publishing but we never really reflected on them as a family.
Now, just think of it, how many of us have written internationally acclaimed papers and articles but do not really apply what we preach? Have developed strategic plans for organisations and yet we do not have any strategic plans for our own lives/families? How many bankers die poor? We are like nicely crafted and magnificent sign posts that point others to prosperity and never get there ourselves.
I then decided to have a personal finance discussion with my family that day. So, today I share what had been part of that discussion.
At the very basic level of personal finance, families deal with a budget. You make money and then you spend that money. Even if you have not created a detailed and written budget you continue to budget on a daily basis. When you are faced with spending money on something, you think about it and realise that by spending that money you will not be able to spend that same money on something else. So, prioritisation of expenditures is very important; hence, the need to consult as a family. The balances you have from your income do save them for a rainy day. It is never too little to save. A couple of thousand kwachas saved each month, translates into money enough to buy your dad a bicycle the following year.
Even after creating a sound budget and cutting unnecessary expenses you may still find yourself with lingering debt to get rid ofâ€”this can sometimes be inevitable for most of us. Using credit and taking on debt by itself is not necessarily a bad thing, but there are two kinds of debt: good debt (productive) and bad debt (consumptive).
Finally, you have created a budget, cut expenses, eliminated your debt and have begun to save for the rainy day. You have definitely come a long way but there is one more important aspect of your finances that you need to consider: insurance.
Insurance is important because you have worked hard to build a solid financial footing for you and your family so it needs to be protected. Examples abound of accidents on Malawi roads coupled with other natural disasters. These can and do happen and if you are not adequately insured, it could leave you in financial ruin.
Have a blessed weekend!