Before You Start Saving, First Take Stock.

Do you constantly feel that you always have far too many bills to pay and far too little money to pay them with? This is a fundamental problem we all encounter as we start earning a living and living it up.  Regardless of how much you earn or how many raises you get, the expenses always do seem to ‘rise up to the occasion, don’t they?

It seems exciting at first when you begin earning an income and can proudly pay for and qualify for loans to afford all those fancy, ever-increasing list of appliances and status items; the new house, car, phone, military-grade drone (this one is on my wish list), home theater system, laptop, etc, and afford to pay the ever mounting necessary family obligations. Until you notice the fat, bulging figures representing your ballooning debt and the shriveled ones representing your diminishing net worth. Then begins the sleepless nights and seemingly endless grind of working just to pay-off ever-mounting debts and expenses, and there seems to be no light at the end of this debt and liabilities tunnel you got yourself into.

So now you want to end this cycle and become financially independent, how do you begin? Well, start saving and investing! It may sound counter-intuitive when you can barely manage to meet your scheduled obligations, but since your next best option is to continue the dreary cycle, you might as well give more than a great shot at doing it right. In this earlier post we talked about the difference between saving and investing, today we look at how you can start saving to begin investing.

How do You Start Saving? You start with a Personal Financial Plan! 

Financial Stock Taking: How To

A personal financial plan makes you live a life of financial consciousness rather than a financially comatose one Click to Tweet

#1 First: Pause and Take Stock

When most people hear, ‘make a budget’ or ‘live on a budget or within your means’ they think it connotes a life of no excitement or ‘enjoyment’ and one of extreme frugality; but that is far from its meaning.

A personal financial plan makes you live a life of financial consciousness rather than a  financially comatose one. It means living consciously and having a concrete plan to, effectively manage your financial resources; in order to attain financial independence and peace of mind, live a fulfilling life and bequeath a lasting financial legacy beyond your lifetime, regardless of how much you earn or make now. It all starts with knowing;

  1. How Much You Own and Owe – This is where you are now. You need to take stock of the monetary values all the financial and physical assets that you own as well as what you owe to others (liabilities). The difference between these two is your net worth or what actually belongs to you or can be realized, assuming you had to immediately payoff all the people you owe with all that you own. This is your Personal Balance Sheet! For some of you, this may start out as negative, meaning, you owe more than you own, but don’t be discouraged, this is why you are putting together this plan to gain ‘independence’ in the first place!
  2.  How Much You Make and Spend Now – In this stage, you need to make a comprehensive list of all your sources of income and all your expenses and their monetary values, no matter how small. This is your Personal Income Statement! If your expenses on a monthly basis exceed your income, you need to start eliminating expenses or make more money, because it means you are either borrowing more (increasing your liabilities) or liquidating assets to pay expenses; both options reduce your net worth.
  3.  What Your Life Goals Are – This is where you want to go or be in the future, the destination for this journey. Here, you need to list all the life goals that you have in mind requiring financial commitments. The car, house, retirement account, kid’s college fund, medical coverage, etc. List them all, and put timelines and monetary values to them as much as possible. This will guide you when you begin preparing your investment plan.

#2. Now: Prepare Your Personal Budget

Now that you’ve taken stock, you can prepare a comprehensive spending budget. The aim here is to:

  1. Prioritize paying-down debts or liabilities that you currently have and are weighing you down
  2. Identify expenses you can eliminate or reduce, to release funds for saving
  3. Incorporate a consistent allocation to savings, no matter how small
  4. Identify the beginning assets for your investment portfolio
  5. Commit to being disciplined in reducing the rate of acquisition of more debt

Now that you have a plan, you can begin implementing it by accumulating savings and allocating them  effectively into various accounts. In the next post we take a look at the various ways you can allocate your savings as you begin to accumulate funds.

Check back here soon for a template to help you with this exercise of stock taking.

I would like to know how you are going to implement this or how you are already doing so now? Please do share your experiences, challenges and questions, through the comments box below. Have a Cheerful Stock Taking and Budgeting Session!

Also check out this short video interview of seasoned investment professional  and author, Burton Malkiel and some others here.

By |2016-11-08T18:21:57+00:00October 7th, 2016|Personal Finance, Saving|10 Comments

About the Author:

I am the Founder of Synercate Advisory Ltd, an Investment Performance Consulting and GIPS® Verification firm in Ghana. I am an experienced finance and investment professional and a passionate advocate for improving the investment industry across Africa. I worked with leading financial services firms such as the Databank Group and SEM International Associates before establishing my firm and I have been at the forefront of championing the formal adoption of the GIPS® Standards in Ghana over the past three years. I also serve as an Independent Pension Trustee on five pension trust boards in Ghana.


  1. Cornelius KA March 15, 2017 at 6:38 pm - Reply

    Thanks alot Ivy, Rich content. Looking forward, I will have to pause today and take stock, will get you updated on my progress!

    • Ivy Hesse, CFA, CIPM March 15, 2017 at 6:51 pm - Reply

      I look forward to your updates Cornelius.

  2. Cornelius KA March 15, 2017 at 6:34 pm - Reply

    Great advice, I just noticed I have been off the track for some time now. looking forward I think I need to pause and take stock.Thanks Ivy, Great stuff.

    • Ivy Hesse, CFA, CIPM March 15, 2017 at 6:49 pm - Reply

      Thanks Cornelius. Mind sharing the steps you intend to take to get back on track?

  3. Naa Odey October 17, 2016 at 4:11 pm - Reply

    This is great and so true. Perhaps one thing that we can do to help us save especially for salaried workers, is to set up standing orders on our salary accounts. that has really helped me save

    • Ivy Hesse, CFA, CIPM October 18, 2016 at 7:45 am - Reply

      That’s a great recommendation, Naa Odey. You usually forget about it when you set it up, meanwhile your funds are accumulating nicely.

  4. Esther October 9, 2016 at 12:40 am - Reply

    Very educative and insightful!

    • Ivy Hesse, CFA, CIPM October 9, 2016 at 11:56 am - Reply

      Thank you Esther. Are you taking stock? What has being your experience on this journey?. I’m sure others would like to know how you are implementing or have implemented these steps.

  5. Naa October 8, 2016 at 9:57 am - Reply

    Save, invest, be disciplined financially and control the things that you can control. Great video!

    • Ivy Hesse, CFA, CIPM October 8, 2016 at 5:43 pm - Reply

      Thanks Naa. Simple steps but great results when implemented consistently.

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