We focus a lot on personal finance because we understand how important good financial management is to financial success. It is the commonly held belief that increasing your income will improve your financial life and future. Parkinson’s law has taught us better. This is why learning to manage money, even in small amounts, is vital. In the process, you will also use tools to help you get the job done. Tools are not just apps, though they can come in the form of apps. As we look at tools think about what the tool does rather than the form it comes in.

Financial plan

Let’s start from the top. You need to have a financial plan. It’s not as complicated as it sounds. A financial plan is simply a document that states your financial goals. So when you say you want to be comfortable or wealthy the financial plan states how that will be measured. How much is comfortable? How much is wealthy? If stating what you want was the key to success wouldn’t we all have it? The financial plan also states how you plan to get there. It breaks down the ‘$1 million invested in 10 years’ to $100000 a year or $8350 per month. The financial plan is the strategy level of personal finance.


So we have a goal of investing at least $8350 per month. We need to figure out how we will have this money available for investing. In comes the budget. Budget is one of those words that has a negative reputation. It is associated with penny-pinching, limiting yourself and cutting off things. However, a budget is simply the short version of your financial plan. It focuses on a shorter period. Budgets are not complicated to make, you can learn how to make one from many resources available for free. What is difficult is sticking to them and that’s where the next tool comes in.


The budget sets out how we plan to use our money. If you’ve ever tried a budget you should be well aware that this doesn’t always go to plan. This is where a lot of people lose heart with budgeting. Setting out a budget alone is not enough, you need a financial tracker though they are more often referred to as expenses trackers. These will help you see your real behaviour and provide contrast with your budget if you are not living up to it. You may find that your budget doesn’t account for some things that are important to you, as shown by your behaviour.


Listing savings here as a tool may not seem appropriate but take some time to think about savings. Savings have one main purpose that can be split into different smaller purposes depending on the circumstances. Savings are all about giving you financial power. Whether this is the power to react to a problem that arises, an opportunity you become aware of or to make certain decisions without worrying about the short term financial impact it’s all about giving you power. So that is why I look at savings as a tool.


The opportunities you take advantage of with your savings include though are not limited to, investments. In simple terms, investments are avenues that you can reasonably expect to grow your money. So whether you do this through direct investments, investment products or any other format the important thing is that you engage in these to put your money to work for you.  Investments qualify as tools here because they grow your money and propel you towards the big plan that is in your financial plan. These can be short, medium or long term.


Another not-so-popular idea is that of insurance. By nature, insurance is hard to get your head around because you don’t need it until you need but the catch is you have to pay for it before you need it. It’s not easy to rationalise that to someone who is working on a tight budget. However, as the old Nicoz insurance adverts would say, “you never know what’s going to happen”. Insurance is about guaranteeing a result. And while I earlier said saving can be used to help you react to problems, insurance does it better.

Education plan

This should have come first but I hope you understand why placing it at the end makes more sense. Roughly speaking your financial position is a result of your conditions and your financial behaviour. Behaviour is informed by knowledge and that said you have to work on improving your financial knowledge. Your financial education plan is key to this. How do you approach financial education? Do you learn from memes and 1-minute social media videos? And how often do you learn something new? Have you taken a course? How many books on finances do you read in a year? These are the things you need to think about. It’s very difficult to recommend how much one should do but I would say you should expect to learn something every week or month at the very least.