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Mark Kayigwa

OPINION: Securing Your Financial Future with Your Personal Finances

When it comes to money and managing finances, many of us are impulsive, and the thoughts of careful and proper financial planning are minimal. We tend to spend money without a care for the future.
posted onFebruary 29, 2024

By Mark Kayigwa

As the year unfolds, the echoes of financial strain resonate in many households. Decisions made at a personal level, impact individuals, families, and those in our immediate circles. Times like this make it crucial, now more than ever, to comprehend the significance of safeguarding our hard-earned assets, financial, physical or otherwise through strategic financial planning.

The first quarter of the year has always been dreaded by many people. It does not help that it comes immediately after many families have enjoyed the festive season and spent most of their savings. 
It is at this point that the merriments fade, and the reality sets in as children return to school after the holidays. The period makes apparent and glaring the lack of foresight in financial planning, emphasizing the importance of preparing for the future.

In November and December every year, we hear statements like “Sawa za kusimbula” and “Don’t see a bag of cement in every ka money.” Yet, every January, we all know and expect the Ugandan, now turned African proverbial statement “60 or 90 days of January” among many other things.

When it comes to money and managing finances, many of us are impulsive, and the thoughts of careful and proper financial planning are minimal. We tend to spend money without a care for the future. Every January or when faced with unforeseen issues that require heavy financial investment, remind us (albeit late) that it is important to instill the discipline of budgeting.

With budgeting, individuals should allocate resources wisely. As you plan, you need to set goals and have a monthly allocation of expenditures, categorize needs from the most crucial, and a portion set aside as savings and/or investments. From identifying and eliminating unnecessary expenses to adopting modern budgeting tools, we need to enhance our financial health and work towards achieving long-term objectives all while spending within our available means.

Savings should be made to cater for eventualities that may not be foreseen including health emergencies, property damage, and loss of income. Additionally, savings may be directed towards a specific goal such as catering to children’s school fees, property accumulation as well as setting aside money to partake in one or more investments.
Emergency funds are an underestimated reality we all need.

This financial cushion serves as a safety net, providing individuals with peace of mind during unexpected setbacks such as medical emergencies, job loss, or unforeseen expenses. By keeping a healthy emergency fund, individuals can strengthen their financial foundations, ensuring a more secure and stress-free future.
Beyond savings, strategic investing is key to growing wealth over time. Individuals need to make wise investment decisions. We have often heard that depending on a singular source of income can be risky in the eventuality of loss of that source of income.

A major challenge we encounter is to have enough savings or investment income that sustain our lifestyles for at least six months should we lose our primary income source. 
Leveraging various types and forms of investment enable us to maintain the value of our savings against the eroding effects of inflation which diminishes the purchasing power of money and its value over time. Thus, we need to invest money in instruments that have the potential to overtake or at the very least shield us from the effects of excessive inflation.

The vulnerability of homes in Uganda to unforeseen events necessitates a broader perspective on financial security. The call to action here extends beyond budgeting to consideration of instruments like insurance cover for our lives and property. We can insure our property, lives, and livelihoods by taking on general insurance, health, and life insurance. 

Health insurance for example is for those times we are ill and in some cases need to pay high sums of money to get good treatment to recover well. By insuring our livelihoods, we get cover in case of death, injury, or permanent and total disability. These risk events if they occurred would change our or our loved ones’ lives completely and quite possibly lead to a life of poverty. The insurance cover helps provide a sense of protection. Consult your insurance agent or broker for deeper insights.

One thing we usually take for granted is acknowledging the direct and intimate connection between financial well-being and mental health. Chronic financial stress can take a toll on mental health, and equally, a positive financial outlook can contribute to overall well-being. This symbiotic relationship encourages us to foster a balanced approach to money matters for a happier and more fulfilling life.
Living in Uganda, where theft, even by those close to us is an unfortunate reality, and proactive measures are vital to protect our possessions.

The imperative extends beyond physical protection like walled fences, armed guards, dogs, and alarms but going ahead to acquire property insurance. Access to insurance coverage is now easier, requiring only a permanent address, proof of ownership, or a tenancy agreement. This inclusivity ensures that a broader audience can secure protection for their homes and health, contributing to a more resilient society.

Safeguarding our financial well-being necessitates a cultural and attitude shift. It goes beyond wealth accumulation; it involves fortifying our finances against the unpredictability of life. The emphasis on the micro-level underscores the idea that financial planning is a shared responsibility, a duty each individual must bear.

As we navigate the complex terrain of personal finance, let us heed the call to action. Embracing micro-level financial planning, including insurance coverage for our health, lives, and possessions and passive income sources, is the pathway to building a resilient and secure financial future.

The time to protect our wealth is now, and the steps are well within our reach. By doing so, we not only fortify our financial landscapes but contribute to the collective strength of our communities.

The writer is the head of finance at MultiChoice Uganda

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