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How to survive when you lose your job or your main source of income
Lilian Katiso
Posted: 5 months 1 day

My boss informed me that the funding for the project I was working on had come to an end. My employer was contractually obligated to give me 3 months’ notice.

When I got the notice, I was sad but was not depressed. This is because I had prepared myself for such an eventuality.

Many of us unfortunately are neither given notice nor prepared when the axe of retrenchment and redundancy falls.

Saying I was prepared meant that I had managed to save up to 6 months’ worth of my monthly living expense. Meaning that, I would still be able to meet my share or contribution to our family budget even if I stayed out of a job or had no other income for 6 months.

Honestly, accumulating that didn’t happen overnight. It took a lot of discipline not only to save but to save where I could keep earning an interest on every amount saved.

One of the disciplines I have had is budgeting. As David Ramsey put it, a budget is telling your money where to go instead of wondering where it went. 

However, you cannot budget if you are not aware how much you spend and on what. This calls for you to track both your income and expenses. This you can do as an individual or as a couple if you are married.

I had a privilege to be hosted along with Robby Muhumuza on Sunday, on NTV show Perspective With Josephine Karungi #PWJK. The discussion was on who finances the family budget.

The feedback from the audience and social media clearly indicated that many married couples do not share the household financing. While some are due to cultural orientation, others boil down to lack of trust.

By marrying it means you trusted your spouse with your life, why not trust them with your finances as well? Which one is more precious?

Our approach has been to draw a family budget which we all pool resources to finance. This make both appreciate the abilities and limitations, not as individuals but as a family which ultimately provides for synergy even in matters finance. Remember two are better than one, because they have a good return for their labor: If either of them falls down, one can help the other up. (Ecclesiastes 4:9-10)

Below are some tips that have worked for me. I have shared them before if you follow my weekly posts.

15 things you can do to help you towards financial independence are:

1. Have a written budget for spending your money...here is just an example of percentage budget allocation based on Gross salary and not on Net salary aka take home

  •  10%-Tithe
  •  10%-savings
  •  30%-taxes & Other statutory deductions (PAYE, NSSF,LST)
  •  10%-Food
  •  10% or 15% -Rent or mortgage
  •  10% or 5% -Fees/medical/healthcare
  •  5%-Transport and Utilities
  •  5%-Giving, charity &insurance
  •  5%-clothes & Entertainment
  •  5%-Debt payment/personal/miscellaneous

2. Have insurance or enough money to pay for emergencies

3. Keep organized financial records and important documents easily accessible…titles, insurance docs, logbooks and family certificates

4. Calculate your net worth (assets minus liabilities) annually

5. Save at least 10% of your income and take advantage of compound interest.

  • The rule of 72 is a shortcut to estimate the number of years required to double your money at a given annual return
  •  Years required to double investment=72÷compound annual interest

6. Have at least 3 months expenses set aside in a readily accessible account...not bank account!

  • If you saved 10% of your gross salary for 15 months you can save up for 3 months’ worth of expenditure. Assuming that your own expenses amount to only 50% of your gross as per the budget example

7. Have a personal investment account for retirement other than NSSF

8. Have money spread across more than one type of investment (shares, treasury bills, land, a business)

9. Pay your bills and debts on a regular basis...the longer you take to pay a loan the more interest you pay....the rule of 72 applies on loans as it applies on investments

10. Work out what an expense costs you in work time...how long it will take you to earn that money in hours worked

11. Teach your family about the value of money and how to manage it

12. Increase your ability to earn by continuously improving your skills or learning new ones

13. Have diversified revenue streams...use talent, skills, available resources

14. Know your purpose in life, what you want to achieve and have it written down

15. Have written financial goals - SMART goals

To your success

 

About the Author: Lilian Katiso is a Financial Management Consultant & Trainer

Twitter: @LilianKatiso