2022: Getting your personal finances on track ?

Going into the year 2022: Getting your personal finances on track is likely a huge priority for you.

The New Year presents the perfect opportunity to take a closer look at your finances and figure out what steps you should take to move even closer to achieving your financial goals.

Many of us make resolutions around this time of year and knowing how to position your financial goals is a task in and of itself, there are a few areas that you should focus on as we head into 2022:

Investing and Long-term financial planning. 

Start Investing for 2022

Investing is a key element of financial planning. It allows you the potential to build wealth for the future and for retirement.

In life, you will always face competing priorities. While it’s important to meet your short-term obligations and enjoy life, it’s also very important to set money aside to invest for the future to help support your longer-term objectives.

Long-Term Financial Planning 

Longer-term objectives maybe retirement, college planning, or purchasing a home. 

The most important thing to remember is that the earlier you start investing, the more money you will accumulate over the years.

Investing requires consistency and discipline. By developing the habit of making regular deposits and contributions, your investments will grow over time.

Diversification is key to getting your personal finances on track in 2022

Thinking about who you are as an investor and how much you are willing to risk in an investment portfolio is always important.

To manage investment risk, consider maintaining a broad diversification of your investments that reflects your personal risk tolerance, time horizon, and your financial objectives.

Diversification reduces overall portfolio volatility – if one asset class loses value, others will offset the loss with gains.

Over time it has been shown that being invested in a portfolio strategy that is broadly diversified increases your probability to have your money grow at a faster rate than inflation, which has remained elevated in recent months.

At Ndovu, we help you discover what type of investor you are by answering a few simple questions. We then recommend a diversified portfolio to help you achieve your money goals. 

Starting early, being consistent, and staying the course will lead to a successful investing strategy and financial outcome.

Determine a 1-Year Goal

The holiday season is a great period of reflection and is a good time to figure out a financial goal that is actionable and attainable within one year from now.

A one-year goal may include changing jobs, buying a new home, starting a new business, or taking on a side hustle to increase your income. 

When looking at the year ahead, it is important to consider both your short-term and longer-term financial objectives.

The short-term may include establishing an emergency fund to ensure you have three to six months of living expenses saved in case a job change or unforeseen expense occurs. 

The longer term may involve looking at how much you are saving for retirement and possibly capturing additional tax benefits with your savings.

Over December, consider:

– Setting up an annual budget to review how much you are spending monthly versus how much you are saving.

– Creating organization around your financial accounts will help to improve the probability of success in achieving your financial objectives.

You have heard the saying, “The early bird catches the worm” Be that bird in 2022.  – Professor Ndovu. 

Ndovu is an online platform owned and run by Waanzilishi Capital Limited, an investment adviser licensed by the Capital Markets Authority (Kenya).