Petal James, Chief of Retail Sales at JN Bank, is advising Jamaicans that earning more doesn’t always translate into wealth or financial success if they are unable to manage their money wisely.
“Money is a vehicle that can take you places, but you must not relinquish your role as its master. You are the driver. You control the steering wheel,” she stated.
She was addressing a recent retirement and financial seminar organised by the Non-Geographic Formations No II Chaplaincy Services Branch of the Jamaica Constabulary Force (JCF), which was held at the Police Officers Club in Kingston.
Miss James said the age-old adage, ‘it is not how much you earn, but how much you save’ remains relevant, especially in today’s economic climate.
“While I can agree that we could all use a pay increase, especially with the recent economic challenges brought on by an ongoing pandemic and the conflict in Ukraine, the truth is more money doesn’t always translate to less problems if you don’t know how to manage it wisely,” she stated.
The JN Bank Chief pointed out that there are many high-net-worth individuals, with significant debt and very little savings and investments, due to poor financial decisions.
She noted that everyone, whether they’re employed in the public or private sector, has a responsibility to become better money managers, as they aim to become more financially successful.
Ms James said there are three basic steps persons can take to make the most of their income each month. These include creating a budget, setting savings goals, and tackling debt.
“When put into practice, these steps can have a big impact not only on your monthly budget, but on your overall financial future,” she said.
Create a budget and stick to it
This might sound simple, but very few people actually put this into practice.
Ms James noted that persons can think of their budget as a guide to reaching their financial and personal goals. “If you have trouble covering all your expenses each month, a budget can help you avoid overspending. That’s because your budget can help you see and understand exactly where your money is going. And whether your spending is in line with personal goals,” she stated.
Set savings goals
Ms James pointed out that one of the best savings goals to start with is an emergency fund. “Building up an emergency fund to help cover unexpected expenses such as sudden medical bills, major home or car repairs, or even a job loss, can help you avoid going into debt when life surprises you with a major ordeal,” she said.
She advised that persons should start by building up three months’ worth of expenses as a goal. “Ideally, you should aim to set aside at least 10 per cent of your salary each month for your emergency fund. And, I recommend that you take this out of your salary before you spend on anything else. In other words, pay yourself first.”
Tackle your debts
Ms James recommended that for persons deep in debt it is advisable that they work to get this under control before taking on new debt.
“The less debt you have the easier it’ll be to pay them off. It could also be helpful to know what your debt is costing you each month,” she said. “Once you know how much your debts costs, you can create a plan that helps you reduce it and eventually pay it off. The sooner you get started, the more money you can save. It’s worth noting that managing your debt and your savings go hand in hand,” the JN Bank Chief said.
She also noted that persons should try to tackle their high interest debt first.