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Financial Literacy Wake-up Call: How to Secure Your Future

Financial Literacy
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It has emerged that most Tanzanians are trapped in a financial hole mainly due to the lack of financial literacy. We live through tough times, and there isn’t much to save. Many households are living hand to mouth. Those who can save some cash for rainy days are simply lucky.

That said, there are Tanzanians with a steady flow of income who should be saving but are simply not doing so: At least 14 percent of Tanzanians are gainfully employed, formally and informally.

If you belong to this group, you are definitely not sure where your money goes. After you pay for essential bills, such as rent, food, and utilities, most of what is left disappears. Setting aside any money for the future seems like a cruel joke. You convince yourself you still have plenty of time to manage your finances.

Well, you are forgetting that financial management skills do not necessarily improve with age, unlike a fancy bottle of wine. Although your paycheck will likely improve as you age, your financial obligations will grow equally. The great news is that if you start paying attention to your finances today, you can master habits that will pay off for the rest of your life.

From Desire to Dollar: Charting Your Financial Journey

First, put a price tag on your goals. Like most of us, you probably have one or two specific financial dreams you would love to realize within the next few years. You may want to buy a car by the time you are 28. You may desire to own a house by the age of 32.

You may imagine the day you are free from that credit card debt or the day you have paid off all your student loans. Or you may want to move out of your parent’s house as soon as possible. The first step toward turning your financial desires into achievable goals is calculating the dollar value of your dreams. Yes, it may seem unromantic, but even dreams have a price tag.

Second, learn how to reach your goals. Okay, you have figured out your dreams. Now it is time to build a road map to get them. To start, find out how much you will need to put aside each month to end up with a specific dollar amount in a set number of years.

Third, ask yourself this question: Where does my money go? Saving is not easy for most people, and setting aside money each month can seem impossible, especially when you are living from paycheck to paycheck, as many in their 20s and even 30s do. But you probably can save, even if you think you are barely making ends meet now.

It is easy to automate your savings, so you don’t have to think about it. But the big hurdle is convincing yourself that there is any money to save. And that begins with understanding your current spending habits so you can choose where to trim costs and make saving a reality.

Lastly, keep track of money coming in and going out. You can do this by:

Automating All of Your Bill Payments for Simplicity

Most banks provide a free way to pay your bills electronically. When a statement comes in, the bank will alert you by text, email, or whatever method you set it up. You then have two options for paying: manual or automatic. You must authorize the bank to pay for you each time with the manual option.

This is a good choice for bills that vary from month to month—like credit card bills—since you will want to ensure all the charges are accurate before you press “pay.” Just ensure you don’t procrastinate and forget to authorize the bank to send the payment.

With the automatic option, you still get to review your bill when it comes in, but the bank will pay for you in a few days unless you tell it not to. The automatic system is a perfect way to pay bills the same each month, like your rent or car payments.

Have Savings Automatically Deducted from your Paycheck or Bank Account

You can talk till you are blue in the face about the virtues of saving, but in the end, the only system that works does not require you to think about it. That is why automatic saving is so brilliant: You don’t see the money being set aside, and before long, you don’t even miss it.

There are a couple of ways to do this. Ask your company’s payroll office if you can have a fixed sum deducted from each paycheck – say, TSH 100,000 a pay period – and channeled directly into your savings account before you even get your compensation.

Or, if your employer doesn’t provide this automatic savings option, you can go to your bank’s website and arrange it so that every month or pay period, money is transferred from your checking account into a savings account. The journey to a secure financial future is that simple. It starts by getting the basics right.

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