Categories
Finance Guides

Financial Prudence for the holiday season

Financial prudence for the Holiday season 

By definition, financial prudence basically means planning well in advance and investing in areas where you can expect high returns. It also means having complete knowledge about the money you have and how you can make it grow best.

 

With 2  months to the end of the year, I seem to be playing catch up with my financial goals, thanks to the sky rocketing commodity prices and unforeseen changes.

 

2022 started in very high spirits, with GRAND plans on how to attain financial freedom. But even with water-tight planning, things happened unannounced.

 

If you are in the same boat as me, my encouragement is that It’s not too late to work on and achieve your financial goals. Here are some suggestions:

  • Find your WHY

What are the things that bring you inner joy, name them?

Reflect on how much time you devote to the things that bring you joy. For example, how many hours in the day do you spend on them? 

What proportion of your budget do you spend on the things that bring you joy? This is a great time to assess your time allocation and re-align your finances to your values. Learn to say ‘NO’ to the things that are not aligned with your WHY. Remember, time is money only if you leverage it.

  • Know your numbers

Just like many of us track the KPIs in the corporate work environment, it is high time we mirrored the same diligence in our personal lives? Some of the key numbers to benchmark are:

  • Liquid net worth:

Liquid net worth is the total value of your liquid assets minus your liabilities. If your liquid net worth is negative, it may be time to minimize your expenses.This ratio helps measure your cash runway in the event of any unfortunate eventuality.

 

  • Savings ratio: Your savings ratio is calculated by taking the sum of a month’s expenses divided by the sum of the same month’s net income. At a 50% savings rate, you will need 17 years to become financially independent. We all have aspirations to retire at some time, this ratio will help you ascertain your rediness to retire from active employment.

 

  • Household expenses ratio; Your housing expense ratio is calculated by taking the sum of all your monthly housing costs and dividing that by your monthly income. Ideally, these should not exceed 30% of your income.

Question is, WHAT IS YOUR NUMBER on these key ratios? Mind the Gap by taking appropriate action.

  • Cut back on unnecessary expenses

COVID 19 taught us the concept of essential vs non essential services. It’s critical to take a closer look at your budget, and make sure you are being proactive and disciplined about things like building up that rainy day emergency fund, focussing on ‘needs’ and ‘loves’ while deprioritizing the ‘wants’ and ‘likes’. A quick hack at budgeting is the 70:20:10 rule whereby 70% of your income goes to spending (needs & loves), 20% is investing and 10% is earmarked for giving.

 

  1. Think long term

It’s important to keep the big picture in mind when the going gets tough, especially for younger people who have the advantage of leveraging compound interest. List the big-ticket items, like property, that you are aiming to invest in the near future, and make a plan to get yourself in good financial shape to do so. Or, think about what you want your retirement years to look like (yes, even if you’re only 22 years old), and start to plan accordingly. Don’t mortgage your financial future, Pay Yourself first and spend what is left.

  1.  Invest in being a good student

Lifelong learning is an important part of a balanced financial portfolio, but it can be a double-edged sword. It takes time and experience to learn how to make sound investment decisions that are right for your long-term financial goals.

Enhance your financial literacy game by listening to podcasts, reading books and seeking professional advice on your financial plans.

 

  1. There is no limit to generating more income

Embrace an abundance mentality, stop lamenting about the economy and waiting for the government to save you. YOU are the one to liberate yourself. 

  • What skills do you have that can be monetised? In this digital and borderless world, you can earn from your skills in the comfort of your home. How are you leveraging technology to increase your earning potential?

 

Africa is ‘blessed’ with a multitude of problems and therein lies the opportunity to create solutions that can impact communities while making you money? Do you see the glass as half full or half empty?

 

  •  What inspires you? 
  • What annoys you? 
  • What problems do you see in your community?

  • Find a healthy balance

Life is about balance— stressing over every decimal point in your bank account at the expense of all joy is hardly a great way to sustain financially prudent habits. So, while it is important to be sensible about saving, investing, and earning money, it is equally important to know when money is well spent.

Again, that means different things for different people. For some, it could mean going on a vacation. For others, it could mean buying ingredients for a home-cooked meal where you get to connect with friends and family. Fundamentally, balance is about learning what true value means, and how the saving and spending of money can help you to achieve it.

  • Understand your investments

Investing is the art of putting your money to work without your day to day involvement, for a return. Before investing, understand the Return on investment, the applicable taxes, inflation rate, your risk appetite and tenure of the investment. PS: Average rate of return in Uganda is 10% p.a, be sure to benchmark all your investments on this. If a deal is too good to be true, it probably is.

 

  1. Protect your income; the following reflections will help you assess your adequacy in protecting your income.
  • Do you have the appropriate insurance cover in place?
  • Do you have a named guardian for your children?
  • Do you have a named beneficiary for your investments?
  • Do you have a plan to distribute your assets?
  • Do you have a will?
  • Are all your documents properly secured?

Understand where you are and seek help to close the GAP. Success is when your investments thrive and outlast you.

 

  1.  Practice Gratitude; count your blessings one by one. Health is the new wealth, don’t take it for granted, leverage it to unlock your potential.

 

After all is said and done, don’t be too hard on yourself if you have fallen behind with your goals. There is no better time than now to catch up on your goals.

 

Remember, “The best time to plant a tree was 20 years ago. The second best time is now.” Chinese proverb

 

If you would like to take a deeper dive into your finances, schedule a complimentary discovery session with us, simply click https://forms.gle/Z1rdsPaAGfMSvHV29 OR send an email to monica@financialfitnessspa.com

You can also join our family platform where we engage with members on effective financial literacy on https://t.me/financialfitnessspa

For God and My Country.

Monica Kasirye Kavuma,CPA

Categories
Finance Guides

Black tax: An investment or a burden?

How to make ‘Black tax’ rewarding  and ensure it doesn’t hold you back 

 

How do you deal with black tax? How do you give as you wish vs giving in to society expectations?  These were questions asked during one of my Financial Coaching sessions. I have taken time to ask various people how they have dealt with this complex question and share some of the tried and tested advice. Hope you find it useful.

 

The payouts that you make to extended family outside your planned expenses constitute what has come to be referred to as Black Tax. The term has its origins in South Africa where expert black entrepreneurs found themselves obliged to disburse pay outs to their extended family on a regular basis. Today the term is used casually in speech to refer to such expenses. It has been identified as a struggle for many, and constitutes uneasiness on personal finances in both the long and short run. 

 

Many African households do not have generational wealth, so the first ones from the house to “make it” cannot indulge in their income selfishly but must share a portion of it with the family to keep them living sustainably. Nor can they make individualistic financial decisions as these have a ripple effect on the family’s financial trajectory.

 

The excitement of getting your first paycheck can not be underestimated. At the same time, learning to manage your finances, getting a good start on your savings and making the right financial decisions can be difficult when you’re just starting out.

 

On top of that, many young people have a responsibility to start giving back to their parents and families who have ‘sacrificed’ much to give their children a decent education. It is important to note that failure to handle these expectations may harm one’s own financial wellbeing in the years to come.

For anyone starting out, there is a great deal of anxiety that accompanies the responsibility to support an extended family while at the same time building your career and trying to achieve your financial balance. 

Unfortunately, no one can ever force you to give from an empty cup. Remember that you need to live within your means. You determine your budget, so you can determine how much you are willing to succumb to the real and perceived pressure to give back. 

So how do we learn to manage our finances in a way that helps us support our families without jeopardizing our own financial goals?

  1. Be realistic about your money

You cannot take control of your money if you do not understand your financial situation – your income, expenses and commitments. There are many tools that can help you track your inflows and outflows, try out the Personal Financial Statement, a tool that helps you take control of your Financial situation.

  1. Ask for help

“We don’t always know how to create and maintain financial boundaries with our loved ones, and this is something a financial adviser/coach can help you to put in place.” Book a free discovery session with one of our experienced coaches.

  1. Financial conversations should not be a taboo with your loved ones

It’s important to align with your family/spouse/children your financial goals and a view of your expenses to help them understand what you can afford. Many times our families believe we can afford more than we can. This is why it is important to have open conversations with the people that we trust and for whom we are financially responsible.

  1. Empower yourself and your family

Demonstrate healthy financial behaviour, for example, by drawing up your budget and sticking to it. Leverage various available tools like Apps, spreadsheets,etc to embed this in your way of life.

  1. Enjoy your income

What would you do if you had all the money in the world? If you were not working, where would you rather be?

Find time to enjoy your hard earned money. Time is an illusion so do not wait till you are retired to enjoy your money. Build mini retirements along your working life. Finding a balance between your financial responsibilities and working toward your own financial goals can give you peace of mind when it comes to your money.

  1. Mindset change

You can see it as an investment. You contribute financially, knowing that in the future you will receive your return tenfold. For example, you may have a cousin who needs assistance with school fees. You could then pay the fees, and in return, he fetches your child from school after work whenever you are unable to.

Two, you may view Black Tax as a way of giving without expecting any quantified return. For example, you see a need at home for financial assistance, and you genuinely want to help out of love and care for your family, which is self-satisfying on its own.

  1. It’s okay to say NO

We should understand that NO is a complete sentence and warrants no explanation. People always have a ‘Plan B’ so you should not feel obliged to sort out everyone’s financial challenges. Give help, but on budget. Borrowing to sort out someone’s challenges takes you many steps further from your financial goals, and no one will be willing to bail you out.

  1. Pay Yourself First

The advantage of “paying yourself first” out of your paycheck is that you build up a nest egg to secure your future, and create a cushion for financial emergencies Without savings, you will be looking at your children as your retirement package which further accentuates the ‘Black tax’ syndrome. 

We are privileged that this generation has quite a number of investment options available, it’s important to gain relevant investment knowledge and seek financial advice.

 

Conclusion:

But how can you best prepare for Black Tax? It pays dividends to have a conversation with your immediate family members and tell them that you will provide what you can, but they must not make you feel as if they are entitled to your money. Set financial goals to know how much you can actually give without financially depriving yourself.

Create a budget plan for the month, and determine where your money needs to go without anyone pressuring you. Instead, you pressurize yourself because you genuinely want to help your family. Black tax can be favorable if you approach it in a healthy and financially savvy way.

Sometimes you may not actually have to give money; time, advice and a listening ear may be all that a person needs to unlock opportunities. Take time to mentor, coach or give opportunities to your extended family, you will reap dividends.

 

Please share your thoughts on whether you have encountered this situation and how you navigated the challenges. Join our community and share your view, Financial Fitness Spa Forum URL: https://financialfitnessspa.com/community/

Categories
Finance Guides

The Future of work: A case for a part time CFO

Future of work: A case for CFO on call services

Small and Medium Enterprises (SME’s) are said to be the engine behind every economy. According to the World Bank, SMEs account for the majority of businesses worldwide and are important contributors to job creation and global economic development. They represent about 90% of businesses and more than 50% of employment worldwide. Formal SMEs contribute up to 40% of national income (GDP) in emerging economies.
The statistics look promising but we should ask ourselves how many SMEs stagnate in their lifecycle because they cannot afford the right caliber of talent to grow, what is the nature of jobs they create and how possible it it to improve on the job quality, what can be done to reduce the mortality rate of these SMEs?

Is it time for SMEs to consider CFO on call services?

Having access to a virtual CFO can be a big benefit for a small business. Most of them can’t afford an experienced, knowledgeable CFO on a full-time basis and may never consider hiring one. That’s a problem, because many small businesses fail within the first three years.

When does it make sense for a business to consider hiring a part-time CFO? Are there situations in which it doesn’t make sense at all? What attributes and criteria should businesses use to filter and select candidates? This article looks at answers to all three questions, and is intended to be a practical guide to how an On-call CFO can be leveraged.

Case study

Janelle is a single mum with several years experience in sales and marketing and a passion for baking.
Jannelle started a bakery 6 years ago in her unutilized room at her apartment. The business took off, thanks to her networks and repeat customers. Today, she has 4 outlets where she distributes her products consistently and guarantees a certain level of revenue and operating cash flows.

Janelle currently handles the production, supply chain, bookkeeping, sales and marketing single handedly. As the weekly volumes increase, Janelle’s roles have grown beyond what she can handle. Her business has gained admiration from potential investors who would like to discuss potential areas of collaboration that may necessitate tapping into the export market.

Overwhelmed by the volumes of work, Janelle considers outsourcing the financial work to focus more on sales and partner relationships. She drafts the following job post and shares it on the various platforms:

“Local bakery seeking a part-time CFO to assist with all things accounting, including but not limited to: AR, AP, bank reconciliations, payroll, and month end/year end reporting. Will also assist with quoting, as well as HR management and oversight of company benefit programs. Ideal candidate should be at least 5 years of experience with QuickBooks and be ready to take on other ad hoc financial projects, modeling, etc. as requested by the owner.”

This posting perfectly lays out what the bakery needs, however, what she described is probably not the best solution to meet those needs. Any experienced part-time CFO will recognize the warning flags and steer a mile away.

Some considerations to make are:

How can the job post be modified to serve the bakery better and set up the desired CFO up for success?
Does Janelle need to be considering a part-time CFO arrangement at all?
Are there situations where it does not make sense to hire a part-time CFO?
Let’s delve deeper and attempt to answer the 3 questions above based on my experience in the Finance world.

When Does It Make Sense to Hire a Part-time CFO?

1. Very few SMEs magically need 2,000 hours of a CFO’s time each year. They may have stretches where they need a full day or week of work, followed by extended periods of nothing. A part-time CFO fills that need nicely.

2. Flexibility is good. It’s one of the reasons companies rent equipment and enter short-term leases. Companies should allocate 15 to 25 percent of total overhead as flexible, meaning it can be added or subtracted in a week or less, CFO on call services fit that definition.

3. A fractional CFO brings diverse experience to each engagement. The value of diversified knowledge can be leveraged by SMEs to provide them with a balanced perspective.
This is not saying full-time CFOs do not have a broad perspective, but there is a tendency to get a bit industry-centric or even company-centric over time.

4. Annual cost of a part-time CFO is generally much less than a full-time counterpart. A highly-skilled full-time CFO earns a minimum of $50,000 annually without consideration of additional costs like taxes, benefits, obligatory training and conferences, office space, etc.

A CFO- on-call earns on average 60% less than a full time CFO and yet many of the key benefits of a full-time CFO can be extracted through a part-time arrangement at a far lower overall annual cost.

5. Outsourcing brings access to a level of talent that might not otherwise be available. Many highly experienced CFOs would not commit full-time to a SME operation, mostly because it wouldn’t be challenging. They may, however, be very happy to devote 25 hours a month to high-level oversight and assistance.
Outsourcing also enables hiring specialists for each need. For example, a startup might hire a part-time CFO to develop a business plan, a different expert for a pitch deck and fundraising, and later a different specialist for setting up their finance function and business processes, competencies which may not be had by one CFO.

Qualities of SMEs ready to take on CFO on call services are:

Revenues of between USD 150,000 and USD 500,000, above that you can afford a full time CFO

Over 10 employees

A strong book keeper to handle day to day transactions
A management team that is analytical, values solid financial reporting, and seeks to make decisions based on metrics rather than gut feel.

When Does It Not Make Sense to Hire a Part-time CFO?

It is quite possible for a company to be in the right size range, and have a legitimate need for CFO oversight, but still not be an ideal candidate for a remote or part-time CFO arrangement.

Here are a few of those situations:

Freewheeling management team that makes decisions on the fly and doesn’t think to reach out for the CFO’s perspective if he/she isn’t with the team that day. Obviously, a part-time CFO is part-time and will not be present for every big decision. The CFO becomes a waste of money if management constantly forges ahead with big decisions without incorporating the value of the CFO’s insight.

Culture where everyone in the company is expected to be at the office and put in full days. In this scenario, a CFO who isn’t around every day will struggle to fit in and make an impact. This can be a big deal even if management is on board with the concept. A remote arrangement mitigates this problem, but the mentality can make the arrangement difficult even then.

An unstructured environment where chaos is the norm and attempts to implement financial systems and controls are overridden. Some entrepreneurs/owners will simply never understand why they need approval from the sales manager before giving a major sales discount, or why it’s not wise to give a raise to an employee who bypasses HR and comes straight to them. Owners who always barge ahead and do what they want regardless, will not work well with a part-time CFO (or a full-time one, for that matter). As companies mature, so must the management structure.

Owners who take pride in their accounting skills and financial acumen have the illusion that they could theoretically be doing everything themselves and perhaps even better. Best for both the owner and CFO not to even start.
SO what was wrong with the job posting?
The list of bookkeeping duties indicates a lack of understanding of the CFO role. Bookkeepers generally handle A/R, A/P, payroll, etc. While an experienced CFO may enjoy some of those activities as a break from strategic tasks,it is probably not the best use of their time or your money.

Focusing on experience with particular software packages ignores the reality that a quality CFO should be able to quickly get up to speed in virtually any software environment. It is far better to hire a good CFO without specific software experience, than a mediocre CFO who has experience with your software.
The job description includes too many day-to-day tasks. To make a part-time CFO engagement cost-effective and productive, avoid this pitfall.
Understanding the CFO role

Let’s take a moment to rephrase the job posting:

“Rapidly growing bakery seeking a part-time CFO to provide high-level financial oversight and collaborate with management on strategic items such as pricing, supply chain management and project costing software. The ideal candidate will streamline the company’s financial processes and operations and help the owners set the stage for going to the next level.
The CFO will be responsible to manage the bookkeeper who handles day-to-day financial operations. The company currently uses QuickBooks, but is open to migrating to a more robust platform, at the recommendation of the new CFO. A finance expert who sees the big picture but doesn’t miss the details will thrive as part of this company and management team.”

Finding the Perfect Fit

Finding a part-time CFO that “fits” right in with your company is extremely important, but also hard. Here are a few questions over and above integrity and personality you may want to consider:
How do you communicate? Each person and company has their “way.” Some use email, others messaging channels like whatsapp, some need an actual voice on a phone call or video conference. If your communication methods don’t connect, the engagement will struggle.

What is your average turnaround time for communications? This is a question for both CFO and owner. Some people are “always live” and respond at 10pm to an email. Others feel a 2-day wait is completely acceptable.

What industries have you worked in? This question is especially important for industries with niche accounting needs. For example, accounting for manufacturing, construction, consumer lending/banking, investment firms, etc. is relatively complex and requires specialized experience.

What specific task do you enjoy the most in the CFO role? This will give you a quick sense where the CFO’s heart is. Is it in month end reporting, financial projections, fundraising, or strategic planning with the leadership team? See how that aligns with what you need.

How much time do you have to commit to us? Freelancers, like business owners, can be guilty of taking on too much. Make sure the CFO has the current bandwidth to do what you need to be done.

Hiring a part-time CFO can be an intimidating step, but if done right, can be the ticket to the next level. Take the time to find someone who fits with your company. Wait to settle on any ongoing work until after that first project. That gives all parties a chance to grow into the arrangement and provides a mutual opt-out point.

Unlike a full-time hire, the risk with an outsourced CFO is pretty minimal. If it doesn’t work out, you end the engagement. More likely though, you’ll look back after six months of success and wonder how you ever got by before.

Categories
Finance Guides

Making Personal Finance A must for Early Learners

Money affects more than just our bank accounts. It has an impact on our emotions, sense of well-being, overall mood, and even our health – manifested as stress or the lack thereof. The emotional responses evoked by our personal finances influence the money decisions we make. It is important to identify and be mindful of any feelings you have that may have an impact on your personal finances. Luckily, there are steps you can take to minimize emotional responses so you can make logical financial decisions.

Current situation:

It is common practice for people to make money decisions influenced by their parents, peers/influencers, personal experiences and advertisements which usually do not have their interests at heart.The divergence in behaviors of financially literate and illiterate individuals is the difference between a financially secure future and a future plagued by financial struggles.
Education should be the panacea to build individuals confidence about the decisions that you make.

Case for including personal finance in the syllabus.

a)   You need to know what money can and can’t do<

Knowing how money factors into our daily lives is a key asset in life. Knowing and understanding money is called financial literacy. To be financially literate means to be able to make responsible decisions with regards to money/finances.

Financial literacy can help you manage your money to the extent that it can prevent you from getting into debt, or living arrogantly when faced with too much money. It teaches you that there is, in fact, a limit and that if your income doesn’t balance out your spending, either you’ve got some savings left, or you’re in debt already. This basic form of budgeting is something most of us never get taught until we face it the hard way.

b) Talking about budgeting, you’re probably already in debt.

At least in the current COVID 19 climate, being in debt is highly likely given the reduced income, job loss and closure of businesses. What will financial literacy do for you then? It will allow you to be able to distinguish between both good and bad debt. “Good” debt being repayable investments (cash flows from the investment are paying for the debt) and “bad” debt being non-repayable debt (you don’t have the money now, nor will have it later) that focuses on immediate consumption without monetary gains.

When in good debt, financial literacy helps manage it. You are more likely to understand how the debt can be paid off and how to do it most beneficially.
With regards to bad debt, financial literacy will help you avoid it.

c) Why early learning and not late introduction to these facts?

The habits we learn when young are the ones that are so ingrained in us and are the most difficult to break. Habits are based on the knowledge we have at a certain moment in time. We owe it to “the youth” to actually give them the knowledge to survive in a future of uncertain financial climate.

We deal with money constantly. Whether it’s income, spending, savings, debt, mortgages, pension schemes or investments. We need to get into the habit of thinking that when it comes to money, we need to know what we’re doing. And there’s no better age to be taught than as early as possible!

d) Reflecting on the person as an individual and their money

Money has an impact on far more than just people’s bank accounts – it permeates most areas of their lives. It affects central areas of our happiness and well-being: relationships, health, lifespan, lifestyle, and career. Financial problems often have significant effects in many areas of people’s lives and overall life experiences.

The stress of having too much debt or being financially insecure can have a tremendous impact on an individual’s emotional and physical health. Financial insecurity may include constant reminders of outstanding debt, or more extreme situations such as unknown circumstances regarding your next paycheck, keeping a roof over your head, or feeding yourself and your family.

e) Spillover effect to the Communities

Collectively, people’s finances have an impact on their communities. Negative economic shifts can exert even greater stress on the community infrastructure.

Locally, the impact of financial problems can hurt businesses and draw upon city revenue that would otherwise be used for improvements. Beyond local communities, uninformed financial decisions often cause trends that affect our economy at large.

In communities where people are financially savvy and have greater security, the problems that affect undeserved groups are less severe. We can level the playing field by helping to ensure that people have access to financial education and support their process of making important money decisions.

f) Taking financial decisions is in the hands of every individual

There are many people trying to make a buck as the race to survival heightens. Aggressive advertisements pushing consumerism in the disguise of convenience have become the order of the day and this has had an immense impact on how people manage their money.

To teach people at a young age means they see through these schemes when they might need them the most, say after high school, in college, in their first job etc.

It ruins your finances, your mental health and as such can have devastating effects on your future. And the future is very long for the youth, with life expectancy stretched to 90 years. We don’t want to ruin the decades to come by letting them fall into these traps. We need to teach them personal finance.

Conclusion:

Most people never receive any formal education about personal finances. Instead, many of us learn how to manage our money from family members, friends, or co-workers. Our financial habits – good or bad – have been molded over time by our parents, advertisers, peers, social networks, and personal experiences. On the other hand Corporate finance mastery is what we get and recognizably miss the basic foundation on personal finance management. A better way to learn financial skills would be to find a mentor/financial coach who truly has the experience and qualifications to help shape your financial behaviors in a positive direction at the early ages of our life through a formal education system.

The greater the financial strength of individuals within a community, the stronger the community. Changes are rapidly occurring that make addressing people’s financial wellness a huge priority.

At the Financial Fitness Spa we are sounding the alarm. Financial problems are straining economic resources and increasing the expenses of our working class, now is the time to change the narrative. A fundamental part of our mission is to advocate for financial literacy education, encourage employers to implement financial wellness programs at work and get people involved in this movement.

Let’s remember that, “The single biggest difference between financial success and financial failure is how well you manage your money. It’s simple: to master money, you must manage money.” – T. Harv Eker, author of Secrets of the Millionaire Mind.

For God and My Country.
If you would like to take a deeper dive into your finances,schedule a complimentary discovery session with us, simply click https://forms.gle/Z1rdsPaAGfMSvHV29

Categories
Finance Guides

Thriving with your finances post lock down-notes from my diary

COVID 19 has largely been associated with lock-down of different economies in both wealthy and low-income countries alike. The impact of which has been felt at both individual and group level. It is not any story that families have gone through rough and reflective days of the lock-down especially with regards to finances. In the recent past however, governments have had to announce phased approaches to ease the lock down measures, there is an equal measure of anxiety concerning going back to work, business operations, reopening of schools, etc. However, what stays uncertain is the environment in which operations will be undertaken in the new normal.

As a generation that has experienced this tide, we are very privileged, this specifically points at the lock down and not the health related challenges of COVID 19 as this is still here with us for probably longer than we can predict. The Lock-downs have given us a sneak peek into what the overrated retirement may look like when the time comesearly or late, forced or as per age requirements. This is hinged on facts such as some people have lost jobs never to get them back and thus rudely getting their welcome to the retirement bracket. For many who had been working for several years, it’s been a wakeup call as savings (if any) were severely encroached on and by the second month the anxiety levels were rising as fear and worry became the better of us.

If saving money is a challenge for you, there are two main ways to save more. First, you can earn more money. Secondly, you can cut down on expenses. Easier said than done, right? But that is really as straightforward as the answer gets. Cutting down is something you can do immediately. Increasing income may take a bit more time, effort, and resources; but the combination of the two strategies really creates a powerhouse opportunity that may improve your financial security.

First things first; setting up and following your budget may also help you see your total savings grow over time. It is easy to appreciate that increased savings helps you attain financial security and reach your personal lifestyle goals.

Through this article, I wish to share some of the learning that can be implemented to steer this storm for generations to come; I couple my experiences during the lockdown with my career lessons and share a blend from a simple lay person’s perspective.

Needs and wants: Away from this are the terms essential and nonessential, in these lie the first lesson. The realization that I can live comfortably with the little available and that convenience stores are designed to promote consumerism. My shopping budget has significantly reduced by half, yet I have been enjoying a balanced diet at a fraction of the usual budget. Processed foods with sugars, salt and fats are convenient in all the supermarkets and takeaways around us, appear cheaper and easy to access but have long term health effects.

Thriving with your finances post lock down-notes from my diary

TIP: Re-allocate a portion of your pre-COVID supermarket budget to savings.

Ability to exercise consistently and on a budget – in my pre-covid days, I would pay annual gym membership to access different amenities but hardly got the time to make it to the gym due to many factors/excuses if you may. During the last 2 months, I have been able to maintain physical fitness by eating right, taking family walks and engaging in home sports with my family.

TIP: Identify creative and fun ways to maintain physical fitness at minimal cost.

 Managing worries relating to kids returning to school: Parents are nervous about kids missing a whole school year, but they are also not sure they want to risk their kid’s health if schools open. In South Africa, citizens have asked the Government to open bars instead of schools, so that adults test the gravity of the virus first instead of sacrificing their children. On the other hand, some schools have embraced new ways of teaching through online platforms, and who knows, education in this part of the world may be undergoing a revolution. The days of waking up kids at ungodly hours, chaos in the morning traffic jams may be behind us. If parents embraced the need to aid the learners while at home, doing homework together, we could shape, evaluate and critique our education system and together be proud of the outcomes. Investing ina reliable home internet solution is no longer a luxury but an enabler to make this transition successful.

TIP: Be involved in your children’s education, it is not only cheaper but also keeps you mentally sharp as well as improves your communication with the young ones.

Affordable social events: While I recognize the campaign for social distancing, I think it was wrongly coined, going by the explanations given I strongly believe the intention was physical distancing. Through this call we have witnessed scientific weddings, birthdays, graduations and even funerals. Meetings that drain families due to a need for lavish expenditures in such events as was the case before COVID 19 have been avoided.

TIP: These examples have not in any way diluted the ultimate intentions for which they are organized, and essential families have actively engaged without strain. As a witness to some of such events I wish this practice continues post lock down.

Facing Day 1 after Lock-down: The month of June 2020 may appear like a 60 day month (like January after December holidays), don’t panic. Your health is your wealth, put your best foot forward and start all over again. Now that we know the importance of saving for a rainy day, let’s be deliberate with the way we handle our finances – have the end in mind. Set your financial goals, create a budget, seek an expert’s help, allocate your income, and review your progress regularly.

TIP: Do not fear to start again, you have the entire user guide for life after lock-down given the experiences you have ably gone through.

Virtual transactions: Pre COVID clearly exhibited public fear for virtual transactions. However, for both public health and ease of transacting during the COVID times have made Mobile money and digital transactions to become commonplace. I don’t miss paper money at all and neither do I crave visiting malls and arcades. I recommend we all embrace digital payment platforms, not only are they convenient and time saving, but they also give us an audit trail of all our expenses.

TIP: Digitization is a new normal and your early on-boarding shall save you money and travel related risks. However, always take caution since this space has some opportunists.

Vehicles are not a symbol of success and social acclaim: Watching people’s cars parked in their compounds depreciating in value has been a wake up call. If you have a car loan, you have witnessed firsthand negative cash flow (paying off car loan obligations, yet the car is not fulfilling the intended purpose); this calls for some hard decisions post lock down. We now know that if you are not working far from home, the bike is a handy solution and investing in one is a good idea that comes with a double benefit of transport and exercising.

TIP: Trade in your fuel guzzler into an efficient vehicle that will get you from one place to another.

Mortgage? Think twice: That dream house should never cost you a life. For many who are sleeping in houses that are owned by the bank (mortgaged), it is high time you explored avenues to pay off the debts quickly and gain financial security.

TIP: Today’s decisions have everything to do with tomorrow. Be wise and make informed decisions especially if you must tag finances.

The backyard garden: I cannot recall the many times this has been my close balanced diet ally. With the curfew and movement restrictions I just turned to the backyard and picked those greens. This made my meal complete. I believe that every home should have this backyard garden. Having stayed home long enough like never, I noticed a residential home doesn’t serve one sole purpose of providing sleep as the corporate world has allowed me to believe. Just like the world is, a residence should be entirely well fitted with all aspects that support a comfortable life without an extra expenditure added to it.

TIP: A backyard garden is a great idea to add to your residential plan, as you plan for the car park, plan the backyard garden.

Generally, try considering these coping strategies as well.
❖ Know that you are not alone. Many others are feeling stressed and anxious right now, Act.
❖ Stop beating yourself up that you should feel happy or should not be sad.
❖ Stop comparing yourself to others, Run Your Race.
❖ Take the time to honor your reality. Self-awareness is critical when dealing with emotional issues.
Ask for help. Connect with family and friends and if you feel your mental health is suffering, contact a professional.
All hope is not lost, let us look for the silver lining in this dark cloud to ease the stress and anxiety.

‘Be willing to take the first step, no matter how small it is. Concentrate on the fact that you are willing to learn. Absolute miracles will happen’, Louise Hay

If you would like to take a deeper dive into your finances, schedule a complimentary discovery session with us, simply click https://forms.gle/Z1rdsPaAGfMSvHV29
For God and My Country.

Categories
Finance Guides

For Better or Worse, walking the financial talk

Happy Valentine’s day, good people.

As we commemorate the world’s most celebrated day, allow me to introduce another perspective on how else we can leverage this special day to build a financial future we desire.

It is a fact, universally accepted, that money can cause stress when you’re single, but possibly even more when you’re in a relationship. Many times, you have the following questions going through your mind;

  • Do you combine everything into a single joint account or keep things separate?
  • Who pays for what?

Read on to learn how to get confident with your money as a couple.

  • “For Better, for worse. Till Death Do Us Part” What does this really mean for couples?
  •  If your partner got hit by a bus, how prepared can you pull through life financially?
  • Baby news? How financially prepared are you to take care of the new arrival?
  • Job loss – how do you move on when one person loses a job?

It’s been estimated that money issues are the driving force in 90% of divorces, but you CAN live happily ever after, financially speaking, if you work at not letting financial issues come between you and your partner.

Many married couples consider themselves one financial entity. Sharing finances has traditionally been a part of the journey after marriage, or when you move in together. But, what is the best way to manage your money together? While every relationship is different, the following five tips can help your romance stay untarnished by financial woes (and to avoid money fights, which are the worst).

  1. Be open about your debts and current financial status: The most important thing you can do to effectively manage money as a couple is to be as open and honest as possible about the current state of your finances. Letting your partner know about your debts, loans, credit history and money goals can keep an honest stream of communication, and ensure that there are no unwanted surprises in the future.
  2. Be clear with each other on how you feel about how money should be handled: what you hope to invest in, and what your financial goals (like owning a house or car) look like.
  3. Divide your financial responsibilities: Another way to ensure that sharing finances doesn’t end in a disaster is to have an honest conversation about sharing financial responsibilities. 
  • Who is responsible for making the rent payment on time? 
  • How much should you each pay for utilities? Being clear about who pays for—and who facilitates—each bill can help you to work out what is fair and who is in charge of each bill. This can help minimize late payments (and their associated fees!), surprise expenses and of course, fighting.
  1. Set financial goals as a couple: Setting goals on which large purchases you want to make with your partner can not only allow you to communicate what you see in your future, but can also allow you to save for them together. This can even get you to work together towards investments like a house, retirement, or a trip to your dream destination. Making big plans and having things to look forward to can help strengthen your relationship and make your bonds stronger.
  2. Establish a joint budget (and track it): Deciding how much you will both spend on day-to-day things like eating out and groceries can not only help you stay on track with your savings, it can also stop you from having money squabbles, too. Having an honest, ongoing dialogue about finances with your partner can help you both understand your approaches to spending and saving, and can make it easier when certain financial situations arise and tough decisions need to be made. You can even gamify budgeting to make it more fun!
  • Consider having two bank accounts each: Opening a joint bank account is a great idea when you’ve decided to share finances. However, giving control of all of your money to another person can be not only risky, but cause avoidable fights. Consider opening up one shared account and one separate account for income that you wouldn’t otherwise spend on things involving the other person. This can ensure you work together towards goals and be open about money, while retaining a little bit more of your individuality and control over your finances.

Being in a newly-committed relationship is an exciting feeling. Don’t let awful money fights ruin your romance when they could be avoided. By being open with your partner about finances and saving for both fun and practical things together, you can not only maintain your couple status, but strengthen it.

2022 is your year to become a ‘power couple’ and become financially independent. Become the couple that actually breaks the norm and create what you want for yourself financially!

About the author: Monica Kasirye Kavuma is the founder and CEO of Financial Fitness Spa, a Ugandan based financial planning firm whose mission is to impart with individuals, couples, institutions the art of managing their money in a simple and fun way.

Categories
Finance Guides

Building staff loyalty in a time of crisis

Building staff loyalty in a time of crisis

I left my company, we were fired, the company downsized..and such stories were the major conversations between peers during the hard biting C19 period. But could this have been more pro teams, looking at retention, working shifts or even innovating flexible work schedules such as part time or even remote working? These questions now fill the Board rooms as talents were lost in the struggle to keep ‘afloat’ in most cases selfishly by company top brass. 

Behind every company/business is an individual. Behind every individual is a family (direct and indirect beneficiaries). This validates the notion that people are the greatest asset of every economy. This article seeks to dig deeper into how loyal individuals are at the mercy of the ‘unloyal companies’ which abandon them at the time of need, creating a ripple effect that disturbilises the fabric upon which all economics is premised.

For an organization, the objective of vigilance is to ensure that the management gets the maximum out of its various transactions. In the field of purchases, it should get the quality product at competitive rates. In the field of sales, it should get the maximum realization for its products at the minimal selling cost. When it comes to employees, they should get the most productivity from their talent. 

When the economy is thriving, businesses prioritize compliance especially for the top obligations: statutory payments (taxes, NSSF), payroll, rent and other suppliers.

However, It’s clear that the Covid 19 after effects are beginning to bite, and bite hard. Businesses especially SMEs are struggling to keep afloat; 

  • Rental payments are falling behind and some have had to vacate there offices to work from home;
  • Employees with contracts have not been paid for several months;
  • Suppliers who had signed contracts with these businesses have moved down the priority list (these suppliers have rent and salaries to pay, let alone families to look after)
  • Back taxes are accumulating interest and penalties, putting a further strain on the cash flows and going concern status of most businesses.

In Uganda,Banks extended amnesty to their compliant customers who had been hit hard by the pandemic, this was a first and an appreciated gesture.

Likewise NSSF, knowing its core mandate and envisaging the pressure on its savers, stood tall and waged a war on Financial Literacy to ensure that citizens are better prepared to face unforeseen events. Ofcourse, the more people improve their relationship with money, the more interest will be in investments. And with the recent introduction of a voluntary savings scheme by NSSF, it’s a no-brainer that this initiative will increase membership, let alone quality membership(educated, positive and ready to invest). 

We should also acknowledge the mid term access initiative to give savers a life line to re-ignite their businesses, this is a welcome move as it provides options to individuals who have credible plans to multiply their savings and generate cash flows.

The question is, How have companies reciprocated these gestures to their most valuable assets-the employees?

It’s time for employers to treat their employees as real partners and not just view them as wages on which to maximize a return. 

At the height of the Pandemic, many employees were let go as businesses protected their cash runway. As the effects of the pandemic unfold, those who stayed behind in some cash strapped companies have job contracts but with no pay, with a call to keep the faith ‘until things become stable’. 

Most vigilant and loyal employees have run out of options as their emergency savings are exhausted and their hope of dignified employment is a far cry.

How can businesses make their employees’ time worthwhile in these uncertain times?

Here are some ways we could encourage this partnership to flourish:

  • Build trust; where there is trust, people naturally contribute more without feeling that they are being leveraged. Instead of asking, “How can we pay less and get more”, Employers should be asking, “How can we take the best care of our employees?”
  • Communicate effectively and regularly; Silence is a breeding ground for rumors and anxiety which creates a toxic work environment. The caveat here is that, as management requests employees to be patient for unpaid dues, they should be transparent and walk the talk. For example, hiring new staff when you are unable to pay salaries for existing employees is a NO,NO.
  • Find creative ways of meeting your employees’ physiological needs (food, transport, accommodation): understanding and utilizing Maslow’s “hierarchy of needs” can help employers understand a better path to success.

For example, provide meals to your employees, offer basic family needs hampers (e.g. food, consumables at a bare minimum), OR offer to write a letter of support to their landlords to ease the pressure resulting from delayed payments. Meeting the employees at their most critical point of need is something employees should practice in times of uncertainty.

  • Support the growth of employability skills development through continuous education, try out platforms like UDEMY, Coursera and edX for discounted offers given to employers.
  • Senior management can give up a portion of their salaries to cater for low level earning employees, this ensures you have catered for their basic needs.
  • Credit profile; Most employees with running bank loans are behind on their repayments which greatly impacts on their ability to access future credit. Management can assist by reaching out to respective banks so that employees are given a grace period. 
  • Opt in, opt out modus operandi should be considered so that employees can look for ‘gig jobs’ to make ends meet. 
  • If a company is a going concern, management can even consider giving an equity stake for employees who have demonstrated resilience during the tough times to ensure brand loyalty.
  • Offer Mental health rehabilitation camps: Just recently, off the Harvard review I learnt of a company that considered hiring a company Chief Health Strategist who is expected to ensure staff have the right state of being if they must be productive. This goes beyond medical insurance, and in many ways brings staff loyalty and commitment to go over more difficult times with the company they have given their energy, and intellect over the years. 

There is always exchange when you convene great talent that goes beyond money. Talent gives businesses an opportunity to leverage ideas, energy, inspiration,service, solutions, information, knowledge, wisdom, time, credit and goodwill. If employees perceive they get equal or more in one of the aforementioned forms for their skills and time commitment, they will feel fair exchange and good value, otherwise, they will feel ripped off. 

Unfair value exchange is not sustainable, the labour market is undergoing major disruptions as good talent now gravitates towards Employers who value it most.

If Management of businesses can demonstrate to employees that they are truly valued, we are bound to see the ripple effect in the economy. Higher employee engagement drives productivity  which results in sustainable businesses that can withstand economic shocks.