Kyama Mugambi, an MBA student, kicked off our 'Taming Your Wallet' Series.

In this third part, he discusses the key steps involved on the road to the much desired financial freedom.

How can I grow my finances so that I can eventually be financially independent? There are three basic steps that are available to most people. They all fit nicely into one sentence - it goes something like this: Work, save and then invest.

>> Stick With The J.O.B
Stick with your job and do a good job of it. Most people start out with a job which provides a basic income. You may be feeling that your job has a very low income and that you cannot do anything with it. I know the feeling. If it will comfort you then let me tell you that most people started there – some with even less than what you are currently making.

Doing your job well and sticking with it gives you the stability and discipline you will need to manage your finances and make big investments later in life. In due course, circumstances and career options may require you to move – but by then you hopefully should have mastered the discipline of being a good worker. Being consistent with your job gives you a steady income for the next step.

>> Put Something Aside

Put some money aside, not just for a rainy day, but to prepare for some sunny days ahead! Saving consistently teaches you to manage your expenses and prioritize your needs. Truth be told, the discipline of saving every month is a difficult one because there are so many pressing needs. Having said that, saving is crucial for everyone who wants to grow financially.

Budget: The discipline of saving begins with writing a personal budget. A budget is simply a plan of how you will spend your money. Personal budgets vary in complexity but their function is always the same - to help you prioritize on where your shilling is going to go after you have earned it. Like they say, failing to plan is planning to fail. [see Prov 21:5] It will be much easier for you to save up something if you already have a plan of where your money is going. Remember that a budget is only as good as your commitment to it.

10%: In your budget make a deliberate allowance for savings. Don't make the mistake of spending first on all your needs and saving what it left. If my life is anything to go by, there is never anything left! Someone put it well when they said that saving is paying yourself. All other money is for someone else. Make space in your budget to pay yourself. A good place to start is by saving 10% of what you earn. If you are consistent then in a year you have more than your salary at your disposal.

Maintain: Here is a trick I have seen with some of my friends. When you get a pay rise, do your best to remain at the same level of living and increase your savings. Rather than move on to a more expensive neighbourhood, buy more “things” and so on; just maintain your current level of life for just a little bit longer and save the difference. That way, no matter how small your pay rise, it becomes a real help. Maintaining your standard of living gives you more savings which increases your options for the next phase of building your reserves.

>> Grow It!
Now that you have saved some money, make it grow. This is what we call wise investment. This follows the critical Christian principle of life – stewardship. God is the one who enables you to save up some money and he requires you to be a good steward of it. Good stewardship of the money means making it gain the best returns possible. [see Matt 25:14-30]

It is in growing your money that you edge closer to developing financial freedom.

Grow Your Money

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