Financial Planning for Young Kenyan Adults and Why It is Important

As a young adult, financial planning might seem like the last thing in the world you have to worry about.

You have probably just graduated from college, just got your first job and are living alone. This means you have all the freedom you could have probably wished for and are living life with a carefree attitude.

Nonetheless, it is important to realize that planning in your early years is a great benefit, not just now, but also for your older years ahead.

Financial planning for the future better places you in a safer space (financially speaking) in the case of emergencies or unplanned occurrences in your life that may need instant cash.

Here are a few tips for financial planning if you are in your 20s or early 30s:

Start Investing Now

It might seem like you have a whole future ahead of you to start investing, but truth be told, time moves fast.

If you waste the first years of your career life without investing or planning on investing, then it might be too late to catch up in terms of financial planning.

The sooner you start, the better.

Have a sit down with your banker or an experienced financial adviser and explore the different investment options and eventually choose one that works best for you.

Monitor Your Finances

One thing common amongst young adults is that they spend money without really knowing where it is going or how they spend it.

For this reason, most young adults realize that they end up spending more than they actually earn, making them take up loans and in the long run, end up in debt so deep that they can’t deal with it.

The best way to monitor your finances is by keeping a budget and in doing so, you can begin making small, manageable changes in your everyday expenses

Save for Retirement

As a young adult, saving for retirement might sound amusing, but it could be the best thing you do for your older self.

If you are lucky, some companies sponsor a retirement plan for you so you don’t have to worry about saving for your retirement.

If you find yourself working for an employer who doesn’t contribute to your retirement, there are different options on how to save for your retirement. The best option you have is to join a reliable pension scheme to facilitate your retirement savings.

Get A reliable Health Insurance

If meeting monthly health insurance premiums seems impossible, what will you do if you have to go to the emergency room, where a single visit for a minor injury like a broken bone can cost thousands of shillings?

If you’re uninsured, don’t wait another day to apply for health insurance; it’s easier than you think to wind up in a car accident or trip down the stairs.

The cheapest and most reliable health insurance now in Kenya is the government-sponsored insurance, NHIF.

Get a Grip on Taxes

Filing your taxes in Kenya has always been stressed upon by the government, time and time again.

If you don’t file your tax returns now, there are serious consequences that are bound to follow you.

For one, not filing taxes earns you a penalty of 2,000 shillings each year. It might seem small, but once this accumulates, this amount will be too much on your finances.

Second, if you aren’t tax compliant, KRA might bar you from operating a business if there ever comes a time where you want to open up a business.

Third, but not final, some employers take tax compliance very seriously. Therefore, when the time comes when you need to change jobs and you haven’t been filing taxes, you will have yourself to blame.

Start an Emergency Fund

Emergencies are part of life and we cannot avoid them, so the best thing to do is to always be prepared for them.

No matter how much you owe in student loans and no matter how low your salary may seem, it’s wise to find some amount – any amount – of money in your budget to save in an emergency fund every month.

Don’t put away this money under your mattress; put it in a high-interest savings account or a money market fund account. Otherwise, inflation will erode the value of your savings.