There are three basic things you need to get a hold off in order to sort your personal finances.

1. Live within your means

This sounds like a very simple mantra until you see nice ‘affordable cars’ passing you on the road, a advert showing someone enjoying burger, or clothes shop announcing a discount season on all items. 

Don’t overspend, don’t get yourself into debt and start saving. Keep the income side rising, reduce expenses to a decent but affordable figure and keep it there, so that any increase in income automatically increases your savings and makes sure that in future you have less to worry about money.

2. Make the money you have work for you

Rich people don’t work for money – their money works for them. If you work for money, what happens when the time comes when you cannot work anymore? If you saved Rwf 10,000 a year for the next 40 years and earned no interest, you would have Rwf 400,000.

If you invested Rwf10,000 a year and earned a 10% return each year, you would have Rwf 5,267,155. Why the difference? Because your interest earns interest, and its interest earns interest, and so on.

The result is exponential growth. To obtain real wealth, you need to redeploy your money. And that means investment. You can put your money into stocks where you own a part of a corporation; bonds where you loan your money out and earn interest in return; real estate; or start your own business.

3. Be prepared for the unexpected

The best laid financial plan can be quickly ruined by a streak of misfortune: job loss, car accident, fire, theft, or disease. You need to protect yourself, but it’s not nearly as hard as you think. Without savings, living paycheck-to-paycheck leaves you vulnerable. You need a buffer, a way to get back on your feet if disaster strikes. Save enough for at least three months’ expenses. This is savings separate and distinct from the funds you put aside for specific targets.

Yes, if you’re an adult, you need insurance, medical for yourself and family, insurance to cover your car, your house, your business etc.

Ends