ACTIVITY: FINANCIAL MANAGEMENT IN THE HOME
SPEAKER: MR. KENNEDY YEBOAH
What is financial management
¢ Financial management is about planning income and expenditure, and making decisions that will enable you to survive financially.
¢ Financial management involves tailoring expenses according to the financial resources of an individual. Individuals with surplus cash or access to funding invest their money to make up for the impact of taxation and inflation.
¢ Good financial management helps in choosing and working towards realistic long-term goals. These goals are the motivation behind controlling your finances and it builds a financial safety net around yourself and your family to prevent financial disasters.
Biblical support for financial management
¢ John 12:24 : Verily, verily, I say unto you, Except a grain of wheat fall into the earth and die, it abideth by itself alone; but if it die, it beareth much fruit
¢ Proverbs 10:15 “The rich man's wealth is his strong city: The destruction of the poor is their poverty
¢ God gives the power to make riches
¢ Learn to pay you tithe
¢ Practice giving
Why financial management
¢ Scarce Resources( You can not have all you want)
¢ To achieve goals and purposes in life
¢ You can’t control emergencies in life
¢ To achieve financial independence (How early do you want to retire?)
Managing your finances
¢ Plan and Control your expenditure
¢ Cultivate the habit of saving
¢ Manage your debts
¢ Invest your money
Plan and control your expenditure
How do you plan and control your expenditure?
¢ Prepare Monthly Budget: you must be aware of where your cedis are being spent. You have to plan your expenditures and have the discipline to purchase according to your plan. The best way to track expenses is to log them on a daily basis. Use the Expense Log spreadsheet, adding each expenditure as it happens. Try to log expenses on a daily basis for at least a month or two.
¢ Avoid impulse buying: don’t keep to much money on you to avoid buying on impulse.
¢ Make lifestyle sacrifices: Remember that “you can’t eat your cake and have it”
¢ Keep an emergency fund.
Cultivate the habit of saving
¢ The question is: How do I get the money to save?
Assuming you have maximized your income potential, learn to live well on a budget, and consider lifestyle changes that may reduce your expenses.
¢ Savings is an attitude and it should be your lifestyle. Make a conscious effort to save.
¢ There is no surplus money
¢ Issue standing orders
¢ Every little count: Time goes by quickly. If you start your savings plan now, you will enjoy the rewards sooner than you might think.
Manage your debts
¢ Do you have a debt problem? Many people do. It takes a great deal of discipline and determination not to take on debt. It's just so easy to get credit and so much fun to buy things. It's not just the debt that has to be paid back, the finance charges keep coming in every month, as well.
¢ In many cases, people get into trouble with debt because they do not track their debt situation and they do not know what the cost of carrying that debt is.
¢ Inventory your debt
¢ Negotiate for a flexible terms if possible
¢ Pay off the highest interest rate debt first.
Invest your money
¢ Because of time Value for money it is a cost to hold money and therefore you need to invest it.
¢ There are a lot of investment opportunities but where, when and how much to invest is driven by the purpose for the investment.
¢ Some reasons for investment are:
¢ Education
¢ Purchase of vehicle
¢ Housing project
¢ Business setup
¢ Retirement, etc.
Where should I invest the money?
¢ T-Bills
¢ Fixed Deposits
¢ Mutual Funds
¢ Stocks(Securities)
¢ Start your own business
¢ Think of partnership(tap other peoples knowledge)
CONCLUSION
Managing your finances and attaining financial freedom is a personal decision but it call for discipline and sacrifices. Poverty is a mind set and no one is poor until one decides to be poor.
Now the question is, how rich do you want to be?
Time waits for no man and the earlier you make your savings and investment plans the better, your future
