The Basics of Financial Literacy: Manage your Money with Wisdom

Hey there, beautiful soul. 💖 Managing money can sometimes feel overwhelming, especially when you're just starting out as a young adult. It's easy to lose track of where your money goes and feel anxious about future expenses. 

Many of us have been there, struggling with the financial stress of not having enough money to pay for things we need or want and feeling hopeless. But here’s the good news: with a bit of guidance and practical strategies, you can learn to handle your finances wisely and learn to earn more to supplement your allowance/income.

Imagine the peace of mind that comes from making informed money decisions and knowing you’re honoring God with every penny. I made all the mistakes, so you don’t have to.

Understanding the Basics of Financial Literacy

Financial literacy means knowing how to handle your money effectively. It’s learning how to budget, save, invest, and manage debt. Proverbs 21:20 says, "The wise have wealth and luxury, but fools spend whatever they get." Being financially smart helps you make good decisions, avoid debt, and build a secure future.

Create a Realistic Budget That Works for You

Budgeting is the first step to managing your money well. It is the foundation of financial health. It helps you track your income and expenses so you can live within your means and save for the future. Here’s how you can create a budget:

• Track Your Spending: Write down all your expenses to see where your money goes. This includes everything from snacks, entertainment (going out to dinner or picnic with friends, giving to the needy to subscriptions such as Apple music, Netflix, DSTV, SuperAweh.
  

Keep a detailed record of all money coming in and going out. Use a notebook, spreadsheet, or download a budgeting app. 

Split your money into categories like savings, needs (rent, groceries), and wants (movies, new outfit and eating out).

• Set Financial Goals: Think about what you want to save for. It could be a new phone, new laptop, a vacation, an educational course, or even a future home. Goals give you something to work towards.

• Write Down Your Goals: Seeing your goals in writing makes them more real and achievable.

• Review on a Regular basis: Check your budget often and make changes as needed. Life changes, and so should your budget.

Most importantly, Stick to Your Budget: Discipline is key. Avoid impulse purchases and stick to your planned budget every single month.

Think of budgeting like planning a road trip. You need to know where you’re starting, where you’re going, and the best route to get there. Without a budget, it’s easy to get lost financially. Be Money Wise my Friend!

The Importance of Saving and Investing

Saving money gives you a safety net and helps you reach your financial goals. Investing helps your money grow and multiply over time. Educate yourself through books, online resources or workshops.

 Here are some steps to start saving and investing:

• Emergency Fund: Try to save at least three to six months’ worth of living expenses. This is your backup in case of emergencies like losing a job or a sudden expense.

• Savings Accounts: Choose a savings account that gives you good interest. This helps your money grow. I make use of four types of bank accounts.

For Today- Transactional for my everyday use and necessities such as groceries, fuel, food, personal care items, giving, minor emergencies.

For Tomorrow- This is my sinking fund account for planned expenses such as gifts, travelling, subscriptions, hobbies, major emergencies.

For Growth- This is a high interest savings account for growing wealth for investment funds, property savings, and education fund. 

For Business- This is for expanding my means and earning passive income. I use it for business-related expenses and investments aimed at generating additional revenue streams such as capital for new ventures, expenses of marketing, publishing, inventory, equipment. Procuring assets, rental property and for my professional development such as attending seminars, educational materials, networking costs. All this enhances my skills and knowledge.  

• Start Investing: Learn about investing, start small by purchasing shares in local companies listed on the Namibian Stock Exchange (NSX), MTC offers shares to the public and they pay out dividends. You can start with small amounts and let it grow over time.

• Real estate: Start of by acquiring a piece of land and build a one-bedroom flat at the back and build your way up. Paying for a mortgage bond of thousands of millions of dollars is bondage. Take your time according to what your earnings will allow but don't remain stagnant for too long.

Agricultural Investments: Invest in small-scale agriculture or farming projects. This could include cultivating a small piece of land or investing in community farming projects that share profits among participants

Invest in a Side Business: Start a small side business that requires minimal capital, such as selling handmade crafts, art, offering freelance services such as graphic design, virtual assistant, content creation is the new 9-5 job now, we all have gifts and talents, put them to use) drop shipping, digital products, food/beverages, event planning or management, or starting a small online store based on whatever you are good at, sell merchandise. 

This allows you to expand your means and also teach you valuable business skills. (I will create a related posts that has different side business ideas for you to start)

Money Market Funds: Money market funds are low-risk investment options that invest in short-term debt securities. These funds typically offer better returns than traditional savings accounts and are relatively safe. Find out from Bank Windhoek, FNB, Standard Bank etc.

Join a Savings Group: We have informal savings groups at work where we contribute monthly a fixed amount and take turns receiving the collective savings. It’s at work, so we know where to find each other, if all havoc breaks loose, you may approach HR, so it’s quite safe.

Toria planting seeds of abundance

Think of saving and investing like planting seeds.

With time and care, these seeds grow into a big harvest.

Proverbs 13:11 says,

"Wealth from get-rich-quick schemes quickly disappears; wealth from hard work grows over time."

Earning More Money with High-Profit Skills

Increasing your income is a great way to improve your financial situation. Learning high-profit skills can help you earn more. Here are some skills to consider:

1. Digital Marketing: Businesses need help with things like social media and online ads. You can learn these skills through online courses.

2. Coding and Programming: Technology is always growing, and coding is a valuable skill. You can learn languages like Python or Java.

3. Graphic Design: Creating visuals for websites and ads is in high demand. Tools like Photoshop and Illustrator are important to learn.

4. Copywriting: Writing for marketing purposes is a highly profitable skill. Good writers are always needed.

5. Data Analysis: Companies need help understanding their data. Skills in Excel and other data tools are useful.

6. Public Speaking and Presentation Skills: Delivering speeches or presentations effectively to an audience and get paid for it, MC at events or conferences.

7. Event Planning: Organizing and managing events such as parties, weddings, and corporate functions.

8. Social Media Management: Managing social media accounts for businesses or individuals, creating content, and engaging with followers.

Advantages of High-Profit Skills:

• Flexibility: Many of these jobs can be done from home, all you need is a laptop, good internet and a cup of coffee or tea.

• Higher Earning Potential: These skills often pay more than other jobs.

• Job Security: As technology changes, these skills stay in demand.

Learning a new skill is like getting a powerful tool. It increases your income and boosts your confidence and career prospects.

Managing and Reducing Debt

Debt can be a slippery slope, especially for a young person just starting out. Listen to me carefully. What starts as a small loan or credit card balance can quickly turn into a huge burden that feels impossible to escape. Debt is sticky; it clings to you and grows if not managed properly. It can imprison your finances, limit your opportunities, and cause a lot of stress.

Be very cautious with borrowing. Avoid unnecessary debt, live within your means, expand your means and prioritize paying off any debt you do incur as quickly as possible. If you do that, you'll maintain financial freedom and have peace of mind.

If you ever do get yourself into debt, here’s how you can manage and reduce it with careful planning:

• List Your Debts: Write down all your debts, including how much you owe and the interest rates. Be very honest.  Also, for your peace of mind, avoid lending money to friends and family unless you are prepared to write it off or consider it as a gift, it has potential of breaking relationships. Don't make it a habit to like borrowing, get your own stuff, work smart, don't depend on handouts either.
  

• Understand Interest Rates: High-interest debt, like credit card debt, can quickly spiral out of control. Pay off high-interest debts as soon as possible. Such as a home or car loan unlike a personal loan. You don't need a fancy, expensive car when starting off, procure something that is cost effective, fuel efficient. Never get yourself into debt to impress anyone, ever. Maintenance of a vehicle doesn't come cheap.

• Use Credit Wisely: Only borrow what you can afford to pay back. Avoid unnecessary debt and try to pay off your credit card balance in full each month.  My honest opinion, don’t ever get a credit card to begin with, say no to cash loans. It's a trap. Do not get a clothing or furniture account, build up discipline and purchase items using lay buy by paying items off using monthly installments.
  

• Create a Repayment Plan: List all your debts, prioritize them by interest rate, and create a plan to pay them off. Consider the snowball (smallest debt first) or avalanche (highest interest first) methods.

• Avoid New Debt: Be careful with your spending and avoid getting into new debt-like you’d avoid that aunty who is always asking for money—once they latch on, it's hard to shake them off.

Managing debt is like climbing a mountain. It’s tough, but with a clear plan and perseverance, you can reach the top. Romans 13:8 says, "Let no debt remain outstanding, except the continuing debt to love one another."

Smart Spending

• Distinguish Needs vs. Wants: Focus on spending money on what you truly need. It’s okay to treat yourself occasionally, but don’t let it become a habit.

• Avoid Impulse Purchases: Take time to think before buying things. Ask yourself if it’s something you really need or if it can wait. Do not compare yourself with others, you do not know how much money they have or where they get it from. Stay in your financial lane.

• Look for Deals and Discounts: Be a smart shopper. Use coupons, wait for sales in Woolworths, and compare prices before making purchases. For clothing, I first go to Mr. Price, Big Daddy, Fashion World, Legit, Style and Foschini. There are thrift shops that have good quality pieces such as Faldu. You'd be amazed.

• Beware of Lifestyle Inflation: As your income increases, resist the urge to increase your spending. Continue to live within your means and save the extra income.

My Personal Testimony

I used to spend my money recklessly. I would buy things I didn't need and waste money on unnecessary items and spend my salary in a matter of a week and struggle to make it to payday, while surviving only on bread and juice. Don't laugh.

Over time, I realized that my spending habits were not helping me nor glorifying God. So, I decided to change.

Now, I make sure to support my family and loved ones, including orphans and the needy. The remaining portion of my first fruits, I give to the church and help elderly people in my community. This has been a game changer in my life. I encourage you to develop a culture of giving to those in need, give to those who cannot give you in return.

Remember these words.

Seek Advice from Experienced People: Don’t hesitate to ask for advice from parents, mentors, or financial advisors. They’ve been through it and can offer valuable insights.

Stay Informed: Keep up with financial news and trends. Understanding the economy and financial markets can help you make informed decisions.

Stay Humble and Grateful: No matter how much you earn, remember to be humble and thankful. Generosity and gratitude lead to a richer, more fulfilling life.

Be generous: There is joy in giving, and it feels good to fulfil someone's prayers and God's promises. Give cheerfully and with pure intentions. Acts 20:35 says, "It is more blessed to give than to receive."

Closing Thought

Seek wisdom and guidance from God as you manage your finances. Remember, "Honor the Lord with your wealth, and with the best part of everything you produce." - Proverbs 3:9.

You have the power to build your financial future. Make wise financial decisions that reflect your faith and values.

As children of the Kingdom of God, we need to expand our means, create generational wealth, money is not evil, the lustful love and idolizing of money is.

Money is needed to further kingdom purposes and for us to live abundant lives, welcome it, earn it, save it, invest it, grow it and give it generously all for the glory of God.

You deserve to be wealthy.

As always, remain faithful. I love you.

Check out these resources to get you started

Books:

Rich dad poor Dad by Robert Kiyosaki

Your money or your life by Vicki Robin

Online Courses:

Platforms like Coursera, Udemy, and Khan Academy offer free or low cost personal finance courses.

Podcasts:

The Dave Ramsey Show

ChooseFI

The Financial Independence Podcast