Ask The Team (A.T.T)

Do you have a money issue that you’re grappling with? Well, Ask The Team (A.T.T) is here for you! We’re not financial management experts, but Team ABC is happy to share their personal experiences and lessons around money matters. Write to us today – talk2us@abcthebank.com.

Hi, my name is Sheila. Lately, I have been having challenges discussing money related issues with my friends because I feel I never have enough. I feel this has lowered my self-esteem. How can I build my confidence around money-related discussions?

Being financially literate or understanding all aspects of your financial life is crucial to becoming confident about money. A survey conducted by Wells Fargo in 2013 shows most people are too embarrassed or uncomfortable to talk about money openly with topics such as debt, student loans, salary, credit scores and even saving for the future deemed to cause paralytic anxiety.

Below are a few tips put together by Holly Perez, Consumer Money Expert at Intuit and Mint spokeswoman, to help build confidence on money

1. Spending well within your means. Ever been out for dinner with a friend who makes twice what you do and insisted to foot the bill so that you could impress them? Push for activities that will fit your budget instead of racking up debt or running through your whole food budget in one meal.

2. Avoid debt because of overspending. Getting into debt is easy while digging out is hard. It can feel even worse if it’s due to lavish spending habits or poor budgeting. Make a habit to keep tabs of your daily expenditure!

3. Seek professional financial advice. Friends and family are great and can hold you accountable to your money goals, but if you’re seeking financial advice, engage with trusted and reliable sources.

4. Know your credit score and work towards improving it. Knowing your credit score, and working to improve it, is what financial literacy is all about. It may take some time to boost that low score but diligently paying down debt will slowly raise your score and open new doors to you.

5. Planning for retirement in your 20s with active loans and a small salary may sound ridiculous, it’s not. Set aside 2 to 3 percent from your paycheck (gradually increase the percentage). It’s an easy way to build your retirement savings without having to be a personal finance expert.

6. Save. The key to successful saving is automation. Have a standing order from your account and put aside as little as 1 percent of your income into a hard to access savings account. You probably won’t even notice the difference after a few weeks.

7. Money and my significant other. Though you’d probably prefer to talk about anything else, talking about money is key to any successful relationship. Start by sharing how you each feel about money then slowly ease into the stickier topics such as who pays for what, long-term saving versus short-term spending and your comfort level with investing together

From these points, start small and commit to improving one aspect of your financial life at a time. Before you know it, the taboo ‘money topics’ will be a little easier to discuss and manage.

All the best,

J. N, Product Development and Marketing Department

Hi, my name is Lewis, I recently got a job and my salary is Ksh25000 per month. Would you have any tips on how to save and survive in Nairobi?

Hi Lewis, congratulations on your new job!
This is a wonderful opportunity for you to develop a financial plan. Financial planning is deciding in advance how much to spend and what to spend on based on the funds at your disposal. It also ensures that you prioritize the things that may be important but not urgent e.g. saving and investment. To hack this, create a list of your needs and wants depending on their priority. When I got first job in 2010 my net salary was Kes17,000 a month. Because money was tight, I rented a single room along Jogoo road. My rent, inclusive of water and electricity, was Kes5,000. The proximity to my place of work allowed me to walk to and from work therefore cutting down completely on transport costs.

I did my grocery shopping in bulk over the weekend at the nearby Wakulima market. I would spend a thousand shillings on average. I also ensured that I cooked enough food to cover the next day’s lunch and I would therefore not have to spend extra money on food. Carrying lunch to work is one of those life hacks everyone should practice. I still do it to date. There’s a cardinal rule of money –’ Pay yourself first’. This is what kept me going each month. I created a standing order of Kes3,500 to a strict savings account. My savings were not affected even when I was broke as I couldn’t access the funds easily.

Being a first born, I had some responsibilities at home and I would make sure to send at least Kes2,500 for upkeep. I also ensured to treat myself to something nice worth about Kes2,000. Life had its challenges but with my savings I was able to manoeuvre and later on start a small side hustle. I sold second hand shoes online and this supplemented my salary. With time I was able to move to a one bedroom and before I knew it I had found a new job and my pay increased to Kes 40,000.

Looking back, inculcating the discipline to save and invest when I had little has helped me save and invest as I have gotten more. All the best!

A.W, Product Development and Marketing Department

Hi, my name is Miriam. I have found myself in a pay check to pay check situation in that I’m ever broke and sometimes I have to borrow to make it to the next pay check. Please advice.

Hi Miriam, I totally understand your predicament. Two years into my employment, I had little to show in terms of investment or assets until I came across an article by Marianne Hayes on how to set a realistic budget in 4 weeks

A budget helps you know how much money you have coming in and going out and whether you’re able to reach any money goals you have for yourself.

Week 1: Categorize Your Expenses

First things first: Where does your money actually go? Take the week to add up all your expenses in black and white.

Fixed costs: This bucket is for steady, predictable bills that are pretty much the same every month. Think utility bills, your rent or mortgage payment, an internet connection plan, your car loan…

Financial goals: What big-picture money goals you putting away for right now? Everything from the extra money you put toward eliminating debt to saving for a dream vacation to shoring up your rainy day fund goes under this umbrella.

Non-monthly expenses: This category often gets overlooked, but we’re talking about bills that pop up at random times of the year – annual insurance premiums, kids’ school trips and the like.

Flexible spending: This one’s reserved for day-to-day expenses that tend to go up and down each month, including things like entertainment and shopping

To pinpoint what your spending limit should be here, take your monthly take-home pay and subtract your fixed costs, financial goals and that monthly amount you are putting away for non-monthly expenses. Then divide what’s left by 4.3 (rough estimate of weeks in a month) – that’s how much you can spend each week in this category without busting your budget.

Week 2: Identify Any Additional Financial Goals You Want to Save For

Big-picture financial goals rightfully play a vital role in any solid budget. Similar to non-monthly expenses, they’re best approached bit by bit.

Can you comfortably account for goals in your budget, along with what you’re spending day-to-day?

Week 3: Prioritize Where Your Money Goes

Here’s where you may need to do some reallocating of your money. Now that you see where you spend your money and compared it with what your goals are, it’s time to get serious.

To start, it’s always important to be saving for retirement, even if it’s just a small percentage of your salary, as well as working toward at least one month of take-home pay in an emergency fund. So keep those goals as part of your budget, if you’re not including them already. After that, figure out what you need to tackle next and then think about other things that you want to save for.

Ultimately, you’ll find creating and sticking to a budget is a matter of trade-offs.

Week 4: Monitor Your Progress

Falling off the wagon and overspending can be so discouraging that we don’t want to look at our budget and see the damage. Checking in on a routine basis stops that cycle, giving you time to get back on track if you go off course.

With online banking, you can go through your transaction history, once a week or even daily, and gauge how you’re doing.

It’s also important to do bigger picture check-ins periodically to see how you’re progressing toward your goals.

Whether you review your budget with your friend, on your own or with the guidance of a financial professional, use this time to get real about your financial habits. This might involve recalibrating goals, making a plan to cut on overspending and best of all, celebrating milestones with an in-budget treat.

All the best

R.M, Central Back Office Department

 

A.W, Product Development and Marketing Department