AFROSAGES – With another year almost over, how about you find answers to the important questions about your finances before entering into a new one. It is always not an easy task having these important questions to answer about personal finances.
My father died the year I turned 18. I was an undergrad studying mechanical engineering at the University of Ilorin when he died. My siblings and I would have had to drop out of university if not for my industrious mom who toiled day and night to ensure that we graduated.
The tough times that followed my father’s death is the reason I am passionate about financial literacy. I have seen too many kids suffer because their parents never learnt to domesticate money. Financial literacy is not just about you: it also insures your children’s future.
My father’s generation of Africans did not believe in things like life insurance and education saving funds. Their financial illiteracy has derailed the destiny of kids all over our continent. It would be a shame for us to repeat their errors.
The following questions cover the basic first steps of financial independence. I will appreciate it if you would do the following:
- Grade yourself.
- Share your grade.
- Share your plans for improving those grades in the coming year.
The 7 Big Questions to answer about your finances entering into a new year;
1. Emergency Funds
Have you saved the equivalent of 1-month salary in a basic savings account? – 20 Points
2. Six-Month Cover
Do you have the equivalent of 6-months living expenses in a high yield investment instrument? – 20 points
3. Debt Elimination
Are you completely debt free with the exception of your house mortgage? – 20 points
4. Multiple Streams
Do you have at least two income streams? – 10 points
5. Saving Plan
Do you save at least 20% of your monthly income? – 10 points
6. Will and Life Insurance
Do you have a will that protects your family? Do you have life insurance? – 10 points.
7. Education Fund
Do you have a savings plan to ensure that your kids can have a good education even if something happens to you? – 10-points
I scored 80%. I still have some student loans that I have not fully paid off. I plan to pay it off in Q1 2020 so that I can improve to 100%.
Credit: Dr. Tayo Oyedeji