A couple of years ago, on a late Monday afternoon, 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, my genset had no fuel and so it meant neither the hot shower nor the much anticipated movie.
Going round the house, I found my six-year-old son on the verandah perusing through the Weekend Nation. “Dad this is you.” He said pointing to my picture on the Managing Your Personal Finance column while bringing the paper closer to me. “I see you every Saturday on this page. What is personal finance, dad?” 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 would normally show my wife the articles before I sent them out for publishing, but we never reflected on them as a family.
Just think of it, how many of us have written internationally acclaimed papers and articles, but don’t really apply what we preach? 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 evening. 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 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 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.
Even after creating a sound budget and cutting unnecessary expenses, you may still find yourself with lingering debt to get rid of—this can sometimes be inevitable for most Malawians. Using credit and taking on debt by itself isn’t necessarily a bad thing, but there are two kinds of debt: good debt (productive) and bad debt (consumptive).
With pension being a must for those who work full time in Malawi, it has become common for people to sit back and forgo any other saving plans. Many people feel that they simply don’t have enough money left over each month to save.
But retirement savings need to become a priority instead of an afterthought—pension funds alone may not be enough. 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 your family in financial ruin.
Have a blessed weekend as you discuss financial plans with family today!
