Proven Commandments in Personal Financial Management


To achieve financial independence you need to be cautious on how you spend your money and also check where you invest. Do not be deceived by people who tell you that it is all by luck, nothing comes easy. I have come to learn that first you need to work hard, you start working smart when you have made money.

My reason for saying this is because when you are starting something you are usually all alone, and once the money begins coming in you then delegate.

Here are some financial management tips to follow and attain financial independence:

(1) Do not spend more than your income- to be able to cut down on expenditure, one must be able to differentiate between a need and a want, a need is what you cannot do without, but you can do without a want. Work towards limiting your expenditure to the things that you only need.

(2) You must always have a spending plan or a budget- it is advisable to list all your fixed monthly expenses such as, mortgage, loan, fuel, rent, food and so on. Whatever remains after spending should be put into savings pool or account. A budget should be drawn in such a way that the expenditure does not exceed the income.

(3) Make sure you invest your money- after accumulating savings, do not put all your money in a bank where it does nothing for you. Allow your money to work for you by investing it in stocks or unit trusts where it will make more money and this way you will generate wealth.

(4) One must be able to outsmart inflation- apart from the rising prices of commodities the world over; inflation also comes with devastating effects on long-term investments especially those that have low rates of return. Invest in equities, for example real estate appreciates in value over a period of time.

(5) Do not ‘commit’ impulse buying- financial planning is about sticking to your spending plan. Avoid overspending in the name for keeping up with what your peers have or are doing. When it comes to money and spending, always let your logical side make decisions and not your emotional side.

Source by Belsheba Nyabwa

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