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Quote of the Week: “In business or in football, it takes a lot of unspectacular preparation to produce spectacular results.” Roger Staubach- Hall of Fame football player. 1. Would one more straw break the camel's back? What would happen if you got hit with a big bill for an unexpected expense? You've probably heard of the proverbial straw that broke the camel's back. Your personal financial situation is a lot like that camel. You've got ongoing expenses to pay and also need to deal with unexpected expenses. If you are on a solid financial footing, you can bear the burden of your daily bills and afford unplanned but necessary expenses. On the other hand, if one, big unplanned expense could throw your life into disarray; it is time to take a closer look at your lifestyle. While you may be doing well today, if a single expense is all that stands between you and financial disaster, you are heading for trouble, and you need to take steps to avert it before it arrives. 2. How many paycheques can you do without? What would happen if your next pay cheque does not come in? Will you get evicted from your home? Can you afford to keep the lights on? How long can you afford groceries? If you can't live for at least a few months if you suddenly stop collecting income, you have a problem that needs some serious attention. Most experts list the creation of an emergency fund as a critical part of a sound financial plan, which should basically comprise of at least three to six months' worth of your income; which is a great way to give yourself some breathing room if your pay cheques come to a temporary halt. 3. What about your long-term investments? If you've got enough cash to address any emergency expenses, and can afford to live for half a year without another pay cheque, the next thing to consider is the amount of money that you are able to save and invest. The ability to stay on the positive side of the balance sheet depends as much on your ability to save and invest for the long-term as it does on keeping a lid on your spending. Like the fabled tortoise that beat the hare in the race, the investor who stays in for the long term is more likely to achieve his or her goals than the investor who chases “hot tips” for quick profits in the stock market. Time is an investor’s best friend (or worst enemy if you procrastinate too long). This is because, the reality of investing in the financial markets is that the market will go up and the market will go down. Investors who begin early and stay in the market have a much better chance of riding out the bad times and capitalizing on the periods when the market is rising. What to do if you are in trouble financially. If you don't know the right answers to the financial check-up questions, you need to take immediate steps to get your financial house in order. The first step is to cut your spending. Even if you have never thought about it before, setting up a household budget can help you with this effort, even if you only create the budget as a one-time exercise to help evaluate your cash flow. While personal finance may seem complicated, it really boils down to 4 good habits that can make the difference between going broke or building up your net worth each month: · Save as much as you can · Avoid debt as much as possible · Invest · Keep to your plan Just as with achieving a balanced diet or maintaining a regular exercise regime, getting your financial house in order is just what you need to lead a healthy financial life. You can send your comments or questions to This e-mail address is being protected from spambots. You need JavaScript enabled to view it , or visit our offices at Ecobank towers, 7th floor, Muindi Mbingu street. You can also follow us on our facebook page- Zimele Asset Management ( Kenya) View Older Weekly Updates Disclaimer
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