YWSE September Dinner: Personal Finance Management & mFarm

Personal Finance Management is usually a subject that is quiet often overlooked.

So in September, we decided to get one of our Board Members, Ranjeeta Walia, a Financial Consultant to do a training presentation on the Subject.

Personal Finance Management is the management of income for short term and long terms commitment.

There are a few common mistakes that individuals make when managing Personal Finances:

  • Not Saving, or giving saving the last priority
  • Overspending and impulse buying
  • Not having a budget  (you cannot manage what you cannot measure)
  • Not catering for Non-Monthly expenses (insurance, subscriptions, etc)
  • Shopping weekly or daily instead of monthly (hence missing out on bulk discounts)
  • Living paycheck to paycheck

Ranjeeta mentioned that there are four ways to manage the above common mistakes with Personal Finance Management.

Debt Management

Many people end up taking loans for the wrong reasons and hence find themselves in debt.  A Loan should only be taken for emergencies such as Medical Bills or Education. Taking loans for acquiring assets is not a wise decision as they tend to depreciate with time and you may find yourself still paying off the loan for an asset that has lowered in value.

Debts should generally be avoided as they attract interests which eventually end up eating into your incomes.

A good credit rating will ensure that you avoid unnecessary late payment fees by paying your credit cards and subscriptions on time.

Reducing your debt also increases your income. For instance lest say you have two debts to service: A $ 1,000,000 and $100,000. Both attract interest at 10% p.a. You should try and pay off the larger debt first as it will free up money sooner for your to repay the other debt.

Saving for the Future

Look at other options to Save such as Investing your money in Stock, Bonds, Mutual Funds which give a better ROI than a savings account would.

Also, leaving money in a saving accounts means the cash is still accessible and you can always reach into it.

By investing, you make your money work for you as the Higher the Risk, the Higher the ROI. But if you come across a deal that seems too good to be true, you should probably look into it a little deeper before you end up loosing all your money.

Savings should be encouraged for:

  • Retirement
  • Emergencies
  • Future Events (Weddings, etc)

How much should we Save of our Incomes?

The ideal would be to save 20% of your NETT income (After Taxes)

Dividing your Income

This is similar to making Budgets. There are basically two ways that you can manage your income

Method 1:

20% Saving + 50% Needs* + 30% Wants = 100% Income

*From the 50% of Needs (House, Food, Transport), only 30% should be spent on Rent.

Method 2:

10% Savings for Retirement + 10% Savings + 60% Needs + 10% Non-Monthly Expenses + 10% Fun & Entertainment = 100% Income

Managing Expenses

There are several applications that allow you to track your expenses and maintain a monthly Budget.

Disaster Planning

This involved planning for contingencies and unforeseen events. It is advised to have Medical Insurance as paying a small premium goes a long way.

MFarm

Our Speaker for this Month’s event was Jamila Abbas, CEO and Founder of MFarm.

Jamila won an agri-tech competition and received funding to start up a company that helps farmers who are trapped in subsistence agriculture by moving them into commercial farming by leveraging available mobile technology to provide the required real-time information pertaining to market prices.

The Young techie gave us a candid talk on her “mistakes” and how she emerged from them. Her struggles with the agriculture supply chain mangement in Kenya and the dangers of taking on “investors”

It was an evening that definitely had me hooked on the presenters.

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