An Open Letter to Prof Makau Mutua, keep your predictions to yourself.

Recently, I shared an article titled, what to do when you lose your job. I did lose my job a couple of years ago and I wanted to share a few tips on what I did to get back on my feet after that traumatic experience. 

As a response to that article, I received a number of questions about how I managed my personal finances during that difficult time. 

As it is for many people, a job loss catches us unawares and many times unprepared, with little or no emergency fund, where do you begin? The fact that I had 2 side hustles really propped me up during the tough times. But because they were both rather new businesses, I had to look for more jobs as a communications consultant as well as moderating events and as an MC for corporate events, which are well paying. 

The difference though was that I had to put my foot out go pitch. I had to build a professional profile as a moderator, something that I had taken for granted when I was employed. I quickly realized that out of sight is truly out of mind, so I had to ensure that I was top on mind and stayed visible. I took networking more seriously and told everyone who could need my services that I was available to MC/ Moderate. There is no shame in asking, and you will find that there are people out there willing to help. 

So today I would like to share some of the lessons that took me through and which I continue to follow on in my own personal finance journey. 

Calculate your net-worth 

Do you know what your net-worth is? 

The most important place to start when creating your personal finance strategy is to know what you are really worth. 

This is a simple exercise where you write down all your assets and their average value, then write down all your debt/liabilities and do a subtraction as follows Net worth = Assets — Liabilities 

Stick to your budget 

Draw a table and on one column write down all your monthly income, and on the other your monthly expenses. 

Ensure that you stick to the budget on a monthly basis. 

Other tips that I have greatly benefited from was from a mentor who taught me the importance of paying the school fees monthly and ahead of time. Most recently I have also discovered shopping during the sale seasons as well as buying in bulk from wholesale shops as opposed to the supermarket. 

Debt repayment 

Debt isn’t easy to deal with but we must be brave enough to deal with it. 

Write down all your debt and create a payment plan starting with the ones with the highest interest rate. It is advised that you pay more than you should, and I also try to top up my payment with every extra cash I make. 

Cut-up or cancel your credit cards so you are not tempted to use it. 

There are a number of debt management apps that can help you not only track your payments but also reminds you when a payment is due. 

Find a side hustle 

Whether it is a hobby that you can grow into a business, or an opportunity you see in the market, the need for a secondary source of income has isn’t just another sexy trend, it is a necessity in these times. Research, listen to people and you will find that there are solutions that can earn you an extra buck. I had already set up Keyara, a skincare business that kept me grounded and on my feet when finances were tight. 

Implement the 50–30–20 rule 

Older teachings that advised people to ensure rent or mortgage is 30% of gross earnings has been debated in recent times, with more and more personal finance experts advising people to consider the 50–30–20 rule. The basic rule is to divide up your after tax income and allocate it as follows: 50% on needs, ( Rent, Utilities, Payment of debt) 30% on wants, which could be anything from a nice perfume, dining out, attending concerts, while 20% to your savings and repayment of debt. 

I’d also like to challenge you to commit at least 20 minutes a day to read an article on personal finance. If you do not take interest in the 5 tips, trust me on this one! Note: Read, share and let me know what else you’d like me to write about. Thank you for stopping by!