Going round the house last Saturday, I found my four year old son on the verandah perusing through the Weekend Nation paper. “Dad this is you.” He said pointing to my picture on the Personal Finance column while bringing the paper closer to me. “I see you every Saturday on this page, what do you tell people here?” The question caught me unawares.

How I answered my son’s questions is outside the focus of this discussion, but what struck me was the fact that I had never sat down to discuss personal finance issues with my family. I normally show my wife the articles and do practice what we write as much as possible—admittedly, not always.

Just think of it, how many of us have written internationally acclaimed papers and articles but don’t really apply what we preach? How many of us have developed strategic plans for organisations and yet we don’t 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.

The first point is the need to budget for your expenses. 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 haven’t created a detailed and written budget you continue to budget on a daily basis.

When you are faced with spending money on something, you realise that by spending that money you will not be able to spend that same money on something else—economists call this the opportunity cost. So, prioritisation of expenditures is very important hence the need to consult as a family.

Even after creating a sound budget and cutting unnecessary expenses, you may still find yourself with lingering debt to get rid of—this can be inevitable for most of us. Using credit and taking on debt by itself isn’t necessarily a bad thing but there are two kinds of debt: good debt (for accumulating assets) and bad debt (using it to buy goods and services that cannot generate more money).

Secondly, even with mandatory pension in place these days, the amounts aren’t enough for a sustainably comfortable retirement. And even with such pensions, not all of us work in companies. Some of us own small businesses or just farm. It is thus very important to save and plan for your own retirement.

Unfortunately, many people feel that they simply don’t have enough money left over each month to save. Retirement savings needs to become a priority instead of an afterthought. Whether you are just out of college and have 40 years until retirement, or you plan on retiring next year it is never too late to plan and to maximise your retirement savings.

Finally, you have created a budget, cut expenses, eliminated your debt and have begun to save for retirement, so you are all set, right? 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 aren’t adequately insured it could leave you in financial ruin.

Have a blessed weekend as you mind gets troubled by these things.