In our last article about financial management during COVID-19, I talked about some interesting definitions to help you understand how financial management really works.

In this article, I will talk about the practical tools that you can use for free to track your expenses.

Rich Dad, Poor Dad

This is the book we hinted at in the previous article. In his book, Robert Kiyosaki tells the story of his two Dads in his childhood; his own father and the father of his best friend. While he loved both, they were very different when it came to dealing with finances. One was a professor who was struggling to make ends meet and the other was an entrepreneur who knew how to use the money to his advantage.

Now, I’ve read the book but I’m not going to bore you with details about the book that sold +32 million copies. Instead, I’ll leave you with this 11 point-good summary:

  1. Know the difference between good debt and bad debt. Borrowing money to buy something you want is bad debt. Borrowing money to buy something that will generate a consistent stream of income in the future is good debt.
  2. For most people, their profession is their income. For rich people, their assets are their income.
  3. Invest in assets such as; a- Businesses that do not require your presence b- Stocks c- Income-generating real estate d- Royalties
  4. Houses, as assets, do not always go up in value. Therefore, don’t rush to buy any real estate while believing “you never lose in real estate”.
  5. Do not simply aim for more income, aim for more assets.
  6. Keep your expenses low and reduce your liabilities.
  7. Do not simply buy investments. First, invest in learning about investing.
  8. Protect the value of your money. Because money is a currency, more gets printed every day and it loses its value (aside from inflations). Instead, if you’re really set on saving money, not investing it, consider more creative options that do not lose value, like gold.
  9. Take calculated risks. Every rich person has lost money at some point, but many poor people have never lost a dime.
  10. Saying “I can’t afford it” shuts down your brain. Asking “How can I afford it?” opens up your brain and triggers your financial genius to come up with a creative solution.
  11. Pay yourself first. Each month, first invest a certain amount of money into income-generating assets before you pay your bills. You come up short? Use this pressure to pay to inspire you to come up with innovative ways to get enough money to pay the bills before the bill collector comes knocking at your door. This is a difficult, but very important principle. However, it does not mean you should be irresponsible. Always pay your bills. Just pay yourself first, not last. If you pay yourself last, you would feel no pressure, but you would probably not come up with new sources of income either.

The main simplified practical core of the book

In his book, Robert Kiyosaki left us a real gem, a very simplified personal financial statement that you can use by understanding all that we’ve covered so far.

Monefy

Monefy is a practical personal finance mobile application, available on google play and app store, which allows you to track your expenses.

The app has two versions; a free one and a paid one. They both allow you to record all your financial transactions, categorize and track them, daily, weekly, and monthly. I personally use the paid version though because it allows me to create my own categories when I record my transactions and not just stick the ones you see in this picture. The paid version has other features that you will find here.

This video explains the application in more detail.

Don’t like my own personal use and recommendation, Monefy? No hard feelings. Check out this video which has other easy ways to use applications.

The cherry on top

Now, let’s take a look at all what we just said getting applied to Sami who gets 7000 EGP as a net salary.

Income Statement
IncomeExpenses
Salary: 7000 EGPFood: 2000 EGP
Rent: 2500 EGP
Clothes: 200 EGP
Gas: 400 EGP
Car Maintenance: 300 EGP
Eating out: 350 EGP
Sports: 250 EGP
Phone Balance: 100 EGP
Internet Bill: 200 EGP
Electricity Bill: 100 EGP
Total: 6400 EGP
Remaining: 600 EGP
Balance Sheet
AssetsLiabilities
GoldCar (Renting for Uber)An online shop (500 EGP worth of goods)Car
Phone
Rent

As you can see in the income section, we wrote all the streams that give Sami money, which for now is the net salary. Of course, if you work on a commission basis, you can calculate the monthly commission after you have gotten your salary and add it here.

In the expenses section, we added all that Sami spends money on. Sami is a good guy and he used Monefy to be able to anticipate the categories he spends money at easily.

In the assets section, Sami wrote all the things he has that preserve the value of his money like gold. Sami also wrote the assets that generate passive income for him, which is the fact that he has a driver that uses his car as an Uber driver. Sami hasn’t added the profit he makes from this in the income section yet because he’s just getting started. The same goes for the online shop he has also just started.

The liabilities that Sami has are his car (which is considered both an asset and a liability and will be put in one section starting the following month when Sami calculates whether the renting the car generates more money than the gas and maintenance amounts it takes or not). The phone is a liability that Sami can’t get rid of. The same goes for the rent because Sami cannot afford to buy an apartment for the time being.

When all is said and done, your financial situation will always have its highs and lows, as everything in life. The key to good financial management is making sure you’re getting the best out of the highs and making sure that the lows aren’t as bad as we might think. Having a good grip, not too tight though, on what goes in and out of your pocket is important, especially, for the current situation and will save you lots of hassle, and money, in the long run. 

I hope this article was useful. If you have any career-related questions, reach out to the WUZZUF Coaches.

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