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Friday 29 March 2024

Achieving Personal Finance Goals/ Financial Freedom in Africa


Achieving Personal Finance Goals in Africa

Whether you’re under the burden of huge debt or just wish to save more money, setting personal financial goals is essential. 

Especially in Africa, where people need to take money-saving seriously because of financial illiteracy, luckily, African youth are striving to build businesses, and as they are more into entrepreneurship, they know how important it is to save and track money. 

This post aims to provide you with six important and basic steps to achieving personal finance goals while living in Africa or other parts of the world. (Money works the same everywhere).

6 Steps To Achieving Personal Finance Goals in Africa

For any kind of success, we have to set some goals/milestones and start working on achieving them, right? Similarly, for financial success, you need to create personal finance goals and start working on achieving them. 

I’ve broken down the steps for you so that no matter if you've got financial knowledge or not, the details won’t overwhelm you.

#1- Budgeting and Saving

The main step to achieving personal finance goals is to create an effective Budget. You can create a budget utilizing 50 30 20 rule, which says; 

  • 50% of the money should be spent on Needs. 
  • 30% of the money should be spent on Wants. 
  • 20% of the money should be saved. 

This rule is the perfect and easiest way to divide your monthly income. It helps you overcome the urge to impulse buy. 

When you start saving 20% of your income, you’ll get a relaxation to overcome rainy days. Rainy days are mainly those days that are hard from the common days. In those days, you may have an urgent need to spend money, for instance, in the unfortunate event of sickness and other unforeseeable circumstances.

Even if you lose your job, you’ll have the relaxation of mind to survive the upcoming days until you get a new job. So, budgeting and saving money may look boring or hard initially, but it actually earns you freedom, so you must consider it. 

#2- Investing

In simpler words, investing is a form of passive income. Meaning you get more than you’ve invested initially. Now, there are many types of investing, and it's not hard to start investing. All you need is basic knowledge and money for investment, and you’re good to go. 

Here are some types of Investing; 

  • Stocks 
  • Bonds 
  • Funds 
  • Commodities 

There are three simple ways to start investing;

  1. If you have specific knowledge about investing or have time to learn and start investing, this will be called D.I.Y. investing. You’ll be all on yourself. You’ll manage your investments and examine the stock market and everything by yourself. 

  1. If you don’t have time or specific knowledge to start investing, you can seek help from a professional. This will be called professionally managed Investing. There will be a few chances of money loss in this type of investing, which is way less than you can expect in D.I.Y. investing. 

  1. If you don’t have money plus skills to start investing by yourself or through professional assistance, you’ll have an affordable way to do it. It’ll be through the help of A.I. programs that'll do research on both the investor and the company and will suggest to you where and how much you should invest. 

#3- Debt Management

It's always a NO to fulfill your desires or wants through debt money. Credit cards do more harm than anything else. If you want to avoid financial tension, you should better stop taking debt and start giving back the payments you’ve borrowed. 

Saving money can only be possible if your debt accounts are cleared. You can take the help of non-profit debt management organizations, or you can manage your debt all by yourself.

#4- Financial Planning

Financial planning is similar to creating a budget plus setting goals. Out of the many gains, the primary benefit of financial planning is that it ensures an early retirement. 

Creating financial goals, maybe in terms of earning a subsequent amount of money or saving a particular amount each month for a certain period, you start working on those goals, which ultimately pushes you toward your early retirement. 

Financial planning also involves creating an emergency fund. Financial advisors often recommend that people save a six-month emergency fund so that if they have a sudden emergency or any economic issue, they don’t have to borrow money from any bank or loan provider. 

#5- Real Estate

Real estate has always been a hot topic; millions of financially successful people love learning about it and using it to generate money/passive income. 

Well, many of them lost money, too, because they needed more knowledge. So, to earn money through real estate, one must know about buying, selling, renting, and investing in this domain.

  • If you’ve got enough time and energy to invest in real estate, you should consider owning rental properties. It is also called a do-it-yourself strategy. While this strategy may look scam-free, it may cost you a lot of money to manage and maintain the properties when you don’t have any tenants to pay the rent. 

  • The second option is to join real estate investment groups, where big rental companies will construct and maintain the properties and also, they’ll manage the tenants. All you’ll have to do is buy the property; the company will take care of the rest. 

These ways mentioned above are the two primary and traditional forms of real estate investing; you can either buy and sell the properties on your own, or you can take the help of big real estate groups and companies to avoid the hassle. 

#6- Financial Independence, Retire Early (FIRE)

FIRE is a motto that has been trending among individuals worldwide. In Africa, youths are getting more knowledge about financial management and saving, so they are determined to retire early and enjoy freedom. 

The only way to retire early is to start living frugally. Spend less than you earn. Save money aggressively and spend money wisely. 

Whenever you want to achieve goals, you need both self-discipline and motivation. So, for self-discipline, you need to create an effective budget and stick to it. 

On the other hand, you need to join FIRE communities to gain motivation. You can join and actively participate in verified, reliable social media groups/online FIRE forums, where people like you and financial experts will share stories and strategies to retire as early as possible. 

Key Takeaway 

Creating and achieving personal finance goals is essential for everyone. Those who ignore them suffer from the financial crisis. 

Spending frugally and tracking your expenses is the best way to stick to your budget. Consider following the steps mentioned above, and you’ll see how much money you save a month and how fast you achieve your personal finance goals. 

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