By Valentine Tanui – Customer Service Officer, ABC Bank
It’s pay week and the excitement of treating yourself to a little splurge e.g. a delightful dinner at a new hotspot or a relaxing weekend getaway out of Nairobi is real. But before you start swiping your card, it’s essential to plan for it.
Payday excitement can quickly turn into regret if not managed wisely. Here’s how to make your splurge work for you:
1. Prioritize Your Goals
Before you splurge, consider what your financial goals are. Whether saving for a down payment on a shamba, building your emergency fund, or investing in a Sacco or FD account, having clear goals helps you decide how much you can comfortably spend.
2. The 50/30/20 Rule
Managing your money effectively is all about balance and the 50/30/20 rule is a handy guide: allocate 50% of your income to necessities (like rent and groceries), 30% to wants (that’s your splurge fund), and 20% to savings and investments. If you are eyeing an item that is beyond your 30% – splurge fund, consider saving over several months until you can afford it.
3. Think Long-Term
While it’s tempting to splurge, remember that your future financial stability matters too. If you spend Ksh 15,000 on nights out each payday, that’s Ksh 180,000 a year, money that could be growing in a fixed deposit account or boosting your investment portfolio.
4. Create a Sinking Fund
For big purchases, a sinking fund is your best friend. Planning to buy a Ksh 100,000 home entertainment system? Instead of draining your savings, save a bit each month into a designated account. ABC Bank’s Target Account is perfect for this, helping you reach your savings goals without impacting your regular finances.
Splurging should enhance your life, not cause regret. So, indulge in that Java Café brunch or those new shoes but remember, planning ensures that your splurge doesn’t leave you broke before the month ends or hamper your financial future.