How to manage your personal finance as a tech professional
Strategies and tips to help you take control of your personal finances as a tech professional.
The technology industry in Africa is booming, offering tremendous opportunities. Some of the reasons people are drawn to the tech industry are impact, challenging work, flexibility, remote work and lucrative remunerations.
However, making money is only the first step. According to best-selling author Robert Kiyosaki, "It's not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for."
Whether you're working as a software developer, data analyst, or entrepreneur, understanding how to handle money is essential for long-term financial stability. Managing your personal finance can be challenging, but it is important to remember that you are not alone.
Christine Vihishima has helped over 2,000 people take positive action on their finances in the past 2 years. She is the author of an e-book “How Not to Get Scammed: A Beginner’s Guide to Investing.”
Her foray into financial freedom started about four years ago, when she was knee-deep in debt.
“I had multiple sources of income, and was making money, but I couldn’t see where it was going. I had a lot of debt, so I didn’t have any savings, so my money wasn’t working for me. One day, I was reading the smart money woman by Arese Ugwu. After reading the first chapter, I calculated my net worth and realised how much debt I owed,” she said.
“That was a wake-up call. So, I decided to get out of debt and start my journey to financial freedom. Shortly after, I started sharing the things I was learning on my journey and I got positive feedback. That was how I began to teach others and “The Money Mechanic” brand was born.”
When you start managing your finances properly, you'll have a better perspective of where and how you're spending your money. This can keep within your budget, and even increase your savings.
In this article, we will explore some valuable tips and strategies specifically tailored for African tech professionals to help you take control of your personal finances and build a secure future. At the end of the article, you can download our free personal budgeting tool.
So, let's dive in and discover how you can manage your personal finance like a pro!
Building a solid financial foundation
In Africa, income stability can be uncertain. But it is essential that every tech professional who wants to achieve financial independence build a strong financial foundation. The Money mechanic recommends you do the following.
Learn about your money. In other words, gain financial literacy! This is the foundation of all other foundations. Gaining valuable knowledge about your finances will no doubt teach you how to effectively keep, spend, and multiply your money.
Have more than one leg. Imagine your life as a table and the legs as your source of income. If you have only one leg, and it's cut off, your life crashes. However, if you had four legs, which means multiple sources of income. Even if one leg is cut off, the other legs still keep your table standing.
Create multiple income streams. Having a tech career is great. However, relying on only one source of income in an unstable economy is risky. Your tech income can be channelled into other credible investments that will keep multiplying your money even while you focus on your tech career.
Common financial pitfalls to avoid as a tech professional
Although these mistakes are not peculiar to tech professionals alone, you need to be wary of them so as not to hamper your financial well-being.
Lifestyle Creep. This is when you increase your spending as your income increases. Many young techies fall victim to this because of a lack of financial literacy. Rather than increase your expense, Christine recommends that you practise contentment and self-control even when there is an increase in income. Also, save and invest more when your income increases instead of spending.
Peer pressure is one major cause of wrong financial decisions, and so tech professionals need to learn to be wise enough not to feel pressured by their peers to spend carelessly in order to meet a certain standard.
Most African techies are victims of black tax. This prevents tech professionals from saving or investing their funds because their money is spent meeting family demands.
To manage your black tax as a tech professional, The Money Mechanic advised you to have money conversations with your family about your personal obligations, put them in your budget and make sure you save first before making any spending decisions.
How to manage your money as a tech professional
Follow these rules to manage your money properly
Establish financial goals
Setting clear financial goals is crucial for every tech professional. Consider both short-term and long-term objectives. Having well-defined goals will motivate you and guide your financial decisions.
Creating a budget is essential for managing your finances effectively. Track your income and expenses, and allocate funds to different categories such as housing, transportation, groceries, utilities, savings, and investments.
Be mindful of your spending habits and look for opportunities to reduce unnecessary expenses. Budgeting apps or spreadsheets can be helpful tools to monitor your progress.
Build an emergency fund
In African economies where income stability can be uncertain, having an emergency fund is crucial. Aim to save at least three to six months' worth of living expenses. This fund will provide a safety net during unexpected events like job loss, medical emergencies, or economic downturns. Consider setting up a separate savings account specifically for your emergency fund.
Manage debt carefully
Debt management is vital for maintaining financial health. Avoid taking on unnecessary debt and focus on paying off existing debts systematically. Prioritise high-interest debt first, while making minimum payments on other debts. Negotiate for favourable interest rates and consider debt consolidation options if it makes sense for your situation.
Save for retirement
While retirement may seem distant, it's essential to start saving for it early. Take advantage of retirement plans offered by your employer, such as pension schemes or contribution-matching programs.
Investing your money wisely can accelerate your journey towards financial freedom. Research different investment opportunities suitable for your risk tolerance and financial goals.
Consider investing in stocks, bonds, mutual funds, real estate, or businesses. Diversify your portfolio to minimise risks and consult with a financial advisor if needed.
Managing personal finance is a crucial aspect of a successful career in the African tech industry.
Remember that financial success is a journey, and it requires discipline and commitment. With proper planning and execution, you can secure your financial future and achieve your dreams as an African tech professional.
Download Our Personal Budgeting Tool
We have created a personal budgeting tool for you to help track your finance, click the button below to download