Welcome to another week of looking at matters pertaining to personal finance. It also seems as if the rainy season is fully upon us.
This week, we will be looking at the role of consistency in our personal finance journey. According to Cambridge dictionary, consistency can be defined as “the quality of always behaving or performing in a similar way, or of always happening in a similar way.”
Consistency is important in our respective personal finance journey as it ensures that we stay on track at all times irrespective of happenings in and around us.
Consistency helps ensure that we imbibe or create habits critical to our financial well-being. These habits include spending less than we earn or always saving a portion of our earnings or ensuring that we always do our due diligence before we invest.
In the words of Warren Buffet, “Successful investing takes time, discipline and patience. No matter how great the talent or effort, some things just take time.” It is consistency that helps ensure that we make progress no matter how small.
Below are some steps we must be consistent about in the course of our personal finance journeys:
- Automate your payments: Automating or setting direct debit instructions for critical transactions such as transfer to savings or investment accounts or stockbrokers helps make certain that such monies are transferred as and when due and most importantly; are unavailable for unbudgeted expenses.
- Always maintain a budget: As we have always stated, a budget ensures that every kobo is duly accounted for before it is spent. Simply put, budgeting certifies that you tell your money where to go and not the other way round. It also helps guarantee that spending is effectively tracked and monitored.
- Seeking financial advice: Just like it is recommended that we do yearly medical check-ups to ascertain the state of our health; it is critical we also prioritise ascertaining our financial well-being. The best thing to do, is always employ the services of a professional – that way; we are certain of getting independent and unbiased feedback.
- Carrying out periodic reviews: Like we mentioned last month,reviewing our financial performance at periodic intervals (monthly or quarterly or annually) is necessary, as what is not tracked cannot be measured accurately.
A major benefit of periodic reviews, is the provision of enough information to gauge the state of one’s finances – revenue, expenditure, savings and investments. In addition, it also helps guide one’s future outlook regarding the financial goals set.
- Set specific goals per time: Goal setting guarantees that we have definite financial objectives we want to achieve. This is a critical step towards achieving set targets with respect to portfolio or asset building for example.
Goals are not “one size fits all” as they vary per time and per individual. Ideally goals should have varying time frames – short, medium and long term; because different goals have different gestation periods. It is also important we assign realistic time frames to our goals.
Consistency in summary is what ensures that we achieve our set targets. As we are well aware, wealth building is a marathon race and consistency (doing the same things year in, year out) is what helps us stay the course.
Till we meet next week, stay safe and if you are yet to; do remember to get vaccinated.