Why financial security is essential to living a fulfilling life

Why financial security is essential to living a fulfilling life

By Korir Isaac / Posted on Jun 22, 2022 | 10:03

KEY POINTS

Financial planning is the path to financial security. But how do you plan to ensure you lead a fulfilling life in retirement? How can you say that you are working towards financial security, where you can achieve your life goals by properly managing your finances?

KEY POINTS TO REMEMBER

Planning for retirement is a crucial step in financial planning, no matter what your age. So start by considering the lifestyle you want in retirement, how much it will cost you per month (even an estimate), add in for any unforeseen surprises, and work backwards to invest each month to reach your goal.

Living a fulfilling life is important to everyone. To do this, it is essential to plan the five key pillars of life. This includes health and well-being, religion or spirituality, friends, family and community, learning and knowledge, and financial security.

Financial planning is the path to financial security. But how do you plan to ensure you lead a fulfilling life in retirement? How can you say that you are working towards financial security, where you can achieve your life goals by properly managing your finances?

Individuals are different in various respects, such as age, income level, plans and lifestyle, to name a few; so every shot is different. Here are ten things that can help you achieve financial security:

  1. Invest before you spend:

Your monthly consumption must be equal to your income (net of all taxes) minus your monthly investments. A regular monthly investment increases your wealth, so your money earns money for you.

As with any investment, have a diversified portfolio, a mix of equity and alternative growth investments, and income investments in fixed income solutions or structured products.

  1. Have a steady stream of income

Being good with money means having a steady stream of income, either from your workplace or from your investments. Plus, knowing how much you take home each month lets you plan how much you’ll invest and how much you can consume.

  1. have a budget

Once you know how much you are earning and investing, what is left for your consumption. Budget this consumption amount. Planning and tracking your spending for regular and unexpected costs is key to maintaining your lifestyle and knowing how much you have each month to grow your wealth.

  1. Treat yourself

Do not accumulate to accumulate. It’s important to be kind to yourself and take this vacation debt-free. Try to tie treats to reaching a goal or milestone so it’s not just because it’s vacation time.

  1. Resist peer pressure

When you indulge yourself once in a while, resist the pressure to buy things you can’t afford or don’t need, but buy anyway just because your peers do. Financial security requires the emotional maturity to live within your means,

  1. Pay off your debt regularly

Debt isn’t bad, especially if it applies to investments like education or buying a home – it’s good debt. Bad debts are those that don’t help you build assets or those that aren’t part of your goals, like credit card spending on unnecessary luxuries or debt for current consumption. Avoid bad debts and pay them off consistently; you will have more money to invest and enjoy yourself.

  1. emergency money

As with everything in life, emergencies happen, whether they are health issues or family emergencies. Financial planning involves having a fund stored for the financial surprises that life throws at you.

RELATED CONTENT: Haba Haba na NSSF, Helping the informal sector save for retirement

You should have at least 3-6 months of monthly spending on short-term investments to avoid stress and expensive last-minute borrowing. Obtain appropriate insurance for contingencies such as illness and death.

  1. Periodic financial health check-ups

Financial planning is the path to financial security. Every trip requires periodic monitoring and evaluation. Goals change over time, as do your income, health, and family circumstances.

Keep reviewing your financial plan to track your progress toward achieving your home, education, marriage, and retirement goals. You may realize that you need to invest more or, in fact, have more money set aside than necessary.

  1. Ongoing financial education, learning and research

All financial decisions should be based on research and learning. Financial education allows you to set realistic goals with achievable timelines.

Learning about financial planning makes you a more proactive investor, and research will allow you to analyze several options to ensure you make the right financial decision. Don’t just buy land because your friends buy it. Work with a trusted and qualified financial advisor.

  1. retirement planning

Retirement is as inevitable as death. You cannot run away from it, nor delay it. When he decides to come, he comes. No matter what. Everyone, whether in the formal or informal sector, will retire at some point, and for most people, life is never the same.

The worst thing that can happen to someone is to retire with nothing to rely on. Depression sets in when the regular income stream dwindles or stops flowing as soon as someone retires. It is therefore essential to prepare for that inevitable day by saving a fraction of your earnings to a social security fund.

It’s a crucial step in financial planning, no matter how old you are. So start by considering the lifestyle you want in retirement, how much it will cost you per month (even an estimate), add in for any unforeseen surprises, and work backwards to invest each month to reach your goal.

Plan your retirement with NSSF

The good thing is that you can start with the National Social Security Fund (CNSS) with as little as 200 shillings per month. You can top up this amount whenever you have a surplus – or if you really want a big nest egg in your golden years.

If you are unemployed, you can register for Haba Haba through NSSF, save as little as 25 shillings per dayand withdraw half of your income after contributing regularly for five years.

You can register with the NSSF using the USSD *303# or by visiting the nearest NSSF office. Click here for more information on member registration.

If you are an employer interested in registering yourself or your business with the NSSF, please Click here for more information on employer registration.

About Korir Isaac

A creative, tenacious and passionate journalist with impeccable ethics and a flair for anticipated and spontaneous news. He might not say it, but he sure can make quite a fuss.

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