7 Crucial Things To Do Before Investing

Putting your money to work is one of the best ways to maximize your financial resources. Irrespective of what you earn, every Kenya Shilling you bring in is an opportunity to make more.

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Let us look at seven things to do before investing your hard-earned money.

1. Enumerate your goals

Your income is supposed to help you live your desired life and there is no better way to organize your life than having your personal goals that you want to achieve such as buying a car, starting a business, having passive income etc. Having clarity on your goals will help you save and invest effortlessly since you will be self-driven.

2. Budget for your money before you earn it

“Budget is to assist thy budget to help thy purse to fatten. To help you protect your cherished desires from their casual wishes. Have coins to enjoy life,” The Richest Man in Babylon.

Your budget should be your companion in the journey to master your finances and help you allocate your resources into needs, self-development spending and investing. Remember that saving and investing is for the future and will help you with your life goals.

3. Invest in skills

Before you invest you need savings and before savings you need income and before income, you need skills and social capital and before skills and social capital, you need to apply yourself.

It is important to invest in your career or business by learning the necessary skills that will make you more valuable and increase your chances of earning more. Always look at opportunities to increase the size of the cake and investing in knowledge and skills will set you apart and enable you or your business to offer more value to the world.

4. Have an emergency fund

An emergency will help you solve unforeseen circumstances that require monetary inventions such as losing your phone, your job etc.

It is recommended that you have at least 3 to 6 months’ worth of your monthly expenses as savings. An emergency fund will help you turn some problems into mere inconveniences. It helps free your mind and enables you to look at investing from a long-term perspective since most investments take time to start rewarding you with returns.

As you continue to work, you can increase the size of the emergency fund since these days it is possible to lose your job and take as long as one year before getting another job opportunity.

5. Invest in financial education

Financial education will help you with three things. First, it will help you with having the right mindset to connect your personal finances with your life goals and this will make the journey more fun.

Secondly, it will help you have the right skills such as understanding the type of reasonable returns to expect from investments, the inflation rate and why you need to get returns above it to help you be able to sustain your purchase power. Under skillset, you will also understand how to do due diligence before investing and believe you, me, there is always enough time for this.

Lastly, financial education will help you know the toolsets to help you kick start your investing journeys such as an investment account and tools such as standing orders to help you automate some of your investments. Financial education is life long journey and you need to keep learning to get better. This won’t help in some two minutes video on Tik Tok so you need to invest your time in learning and reading the right books on investing and personal finances.

6. Have a meeting with yourself

Since personal finance is all about you and what you want for yourself in life, it is important that you have a meeting with yourself before you make any investment decisions and tell yourself how the investments of interest will help you achieve your life goals.

7. Understand the terms used in investing

Investing your money is the best way to make it work for you. And the sooner you get started, the more money you can make. However, it’s not always that easy, especially if you find yourself confused by the terms used to describe investment opportunities.

Understanding the terms used in investing will help you navigate the investment process more easily and help you make informed decisions. You will also be able to correctly interpret any investment advice and financial markets information


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