MONEYLETTERS: Financial Accountability.
How to be free from bad spending habits and being broke.
Hello! How are you doing? I did not post anything yesterday, I hope you didn’t miss me? Thank you for hanging on!
Have you ever tried telling someone about how you spent your money and then realized that you did not know how you spent it? Or at some point thought about how you wasted the money and how you could have spent it better? Well, I have. At that point, I would make a decision to spend wiser next time, but would eventually repeat the cycle. If you have never gone through this cycle, please do not judge us.
Most times, this loop is often caused by lack of adequate planning and in the case where you plan but still fall for this process, it could be for lack of accountability and discipline. I am sure you know how important discipline is for financial growth. In the case where you find it hard to discipline yourself, what should you do? Just stay with me…
One way to stop this unhealthy financial loop is “financial accountability.” Financial accountability is you taking responsibility for your financial activities(spending, saving, investing), making deliberate financial decisions based on future consequences, keeping tabs and being accountable to yourself, and another person or other people where your finances are concerned. A simple example of accountability could be admitting an error to yourself and your partner(s). In doing that, it will be easier to replace the cause of that error with a different action to produce a different result.
BEING ACCOUNTABLE.
When you think of financial accountability, what comes to your mind? I think of financial accountability in two ways, being accountable to yourself, and being accountable to another person or a group of people with like minds or similar goals as you have.
SELF ACCOUNTABILITY.
This involves financial planning, tracking your expenses, setting financial goals(savings, investments, emergency funds) and having an accountability partner. In many ways, it helps you to know where you are at on your financial journey, and makes it easy for you to determine the right steps to take where your finances are concerned.
Financial planning and financial goals mean different things to me. I see financial planning as what you do to determine how you spend your allowance or salary. Financial goals influence your financial planning as they determine why you spend money like you do.
I think it is safe to say that the absence of financial goals is what makes broke people. If you don't have a reason to have money or what you want to use it for, you will as wee spend hastily and give to those that have reasons for having it. Also, I think having goals make you realize that you need more money.
For example, if I receive 20,000 as allowance every month, my plans may be to save 10%, Invest 20%, pay tithe of 10%, spend 35% on essentials and save 10% as emergency funds and have 15% left. While my goals may be to save 24,000 in 12 months, invest in so and so for 6 months and hit 24,000 in emergency funds in 12 months… all things being equal. These goals, are what will determine how I plan my finances monthly.
ACCOUNTABILITY PARTNER.
This is a person who has like minds with you and a common goal of growing financially. It could be your peer or an older person but essentially someone who is capable of holding you accountable to your plans, goals and actions. This is one way to beat your indiscipline. However, you must learn to be vulnerable where accountability is concerned. Admit your faults and talk about your financial struggles. The person is there to help and vice versa. Funnily enough, you still need discipline to give account of your financial activities to another person knowing fully well that you have the right to do whatever you want with your money.
where accountability is concerned, I do not think you have to be perfect before holding someone accountable. You may not have figured it out yet but in as much as you have what it takes to help the person be accountable and grow, please do not hesitate.
Your accountability partner will help you in reviewing your tracked expenses (so you have to track your expenses), pin pointing ways to make more money or save more money and things like that.
We will continue this topic in the next post.