Tips to attaining financial independence as a young person

Achieving financial independence means gaining control over your financial future, securing long-term stability, and having the freedom to make choices without being limited by money.

For many African youth, financial independence is particularly important given the challenges of unemployment.

Here’s a guide to help you take practical steps toward financial freedom, using strategies that work even in tough economic conditions.

1. Create a Realistic Budget

Budgeting is the foundation of financial independence. It allows you to track your income and expenses, ensuring you don’t overspend and helping you save for the future.

Steps to build a budget:

• Track your income: Write down any money you receive from jobs, side hustles, or family support.
• Identify your expenses: List out everything you spend money on, from rent and food to transportation and airtime.
• Cut unnecessary spending: Look for areas where you can reduce expenses, such as eating out or buying new clothes.
• Stick to your budget: Once you’ve set limits for each spending category, do your best to stick to them every month.

Budgeting helps you understand where your money is going and ensures you live within your means while saving for your financial goals.

2. Build an Emergency Fund

Having an emergency fund is a crucial part of financial independence. Life is unpredictable, and having savings set aside for unexpected expenses, like medical emergencies or sudden job loss, can protect you from going into debt.

How to build an emergency fund:

• Start small: Aim to save enough to cover at least three to six months of essential expenses. Even starting with a small amount each month can help.
• Automate your savings: If possible, set up automatic transfers to your savings account so you don’t have to think about it.
• Use mobile money services: In Africa, platforms like M-Pesa (Kenya, Tanzania) and MoMo (Ghana, Uganda) make it easy to transfer and save money on your phone.

An emergency fund provides security and helps you avoid borrowing money during tough times.

3. Generate Multiple Streams of Income

Relying on a single source of income can be risky, especially in an uncertain economy. Creating multiple streams of income is a smart way to increase your earnings and build wealth over time.

Ideas for generating income:

• Side hustles: Start a side business in an area you’re passionate about, like selling products, offering tutoring services, or running errands for others.
• Freelancing: Use your skills to take on freelance projects. Websites like Upwork and Fiverr connect freelancers with clients who need services like writing, design, or social media management.
• Entrepreneurship: If you’re business-minded, consider starting a small business. In many African countries, entrepreneurship is a growing field, and there are even government programs and NGOs that offer support for youth-led businesses.

By diversifying your income streams, you’ll be better positioned to weather economic challenges and work toward financial freedom.

4. Manage Debt Wisely

Debt can quickly derail your journey to financial independence, so managing it wisely is essential.

While debt can sometimes be useful (like student loans or business loans), it’s important to understand the terms and avoid high-interest debt.

Tips for managing debt:

• Prioritise high-interest debt: If you have multiple loans, focus on paying off the ones with the highest interest rates first.
• Avoid unnecessary borrowing: Stay away from mobile loans or high-interest loans unless it’s absolutely necessary.
• Make regular payments: Even small, regular payments can help reduce debt over time and prevent it from becoming overwhelming.

Being mindful of debt allows you to keep more of your income and direct it toward saving and investing.

5. Invest Wisely

Investing is one of the most effective ways to grow your wealth and achieve financial independence. Start small and focus on low-risk investments to build your portfolio over time.

Investment options for young people:

• Government bonds: Many African countries offer government bonds with low risk and a steady return. For example, M-Akiba in Kenya allows you to invest in bonds through your mobile phone.
• Savings groups: In African communities, savings groups (or chamas in Kenya) allow members to pool their money and invest together, reducing risk while offering higher returns than traditional savings accounts.
• Robo-advisors and apps: Platforms like EasyEquities (South Africa) let you start investing with small amounts and offer a variety of investment options, including stocks and bonds.

Investing helps your money grow over time and is key to building long-term financial independence.

6. Cultivate Responsible Spending Habits

Spending wisely is just as important as earning more. Developing responsible spending habits can ensure that you live within your means and maximize your savings.

How to spend responsibly:

• Track your purchases: Keep a record of what you spend to avoid unnecessary purchases.
• Prioritize needs over wants: Before making any purchase, ask yourself if it’s truly necessary or if you could save the money instead.
• Use discounts and offers: Always take advantage of discounts, sales, and student offers where possible to reduce costs.

Being disciplined with your spending allows you to save more and reach your financial goals faster.

7. Set Long-Term Financial Goals

Having clear, long-term financial goals gives you a roadmap to financial independence. Whether your goal is to own a home, start a business, or retire comfortably, having a plan can guide your decisions.

Steps to set financial goals:

• Define your goals: Be specific about what you want to achieve, whether it’s saving for a house or building an investment portfolio.
• Break them down: Divide your big goals into smaller, manageable steps. For example, if your goal is to save KES 100,000, start by saving KES 5,000 per month.
• Track your progress: Regularly review your goals to see how you’re progressing and make adjustments if necessary.

8. Build Financial Literacy

Understanding how money works is essential for making smart financial decisions. Take time to learn about budgeting, saving, investing, and managing debt.

How to improve financial literacy:

• Take online courses: There are many free resources online, such as videos and blogs, that can teach you the basics of personal finance.
• Join financial groups: Local community groups or youth programs often host workshops or seminars on financial literacy.
• Read finance books: Books like “The Richest Man in Babylon” or “Smart Money Woman” provide practical advice for managing your finances and building wealth.

Building a Path to Financial Independence

Financial independence is achievable when you take control of your finances, diversify your income, manage debt wisely, and invest for the future.

Start by building a budget, setting clear goals, and staying disciplined with your spending.

Remember, financial independence isn’t about how much money you make—it’s about how well you manage what you have.

For more tips on financial planning, visit other finance pages on HFA.

• Watch a video
• Bible verses about financial independence
• Join the conversation

The information below is designed to help you work towards financial independence. You’ll also find biblical principles for managing money with integrity.

Watch a video on moving towards financial freedom

Disclaimer: Hope for Africa is not affiliated with the following video. It is simply being provided as a helpful resource for financial independence.

Simple Steps to Financial Freedom – By Rose Han

Imagine a life where you never have to worry about money again – it’s possible! I’m sharing the 6 simple steps that took me from broke to financially free. From funding your retirement to enjoying the journey, we’re covering it all. Let’s do this!

9 Bible verses about financial independence

Compiled by the Hope For Africa staff on September 24, 2024.

Bible verses related to “Tips to attaining financial independence as a young person” from the New King James Version (NKJV) by Relevance

• Proverbs 21:20
  “There is treasure to be desired and oil in the dwelling of the wise; but a foolish man spendeth it up.”
  Explanation: This verse to the importance of saving and investment in contrast with spendthrift habits that lead to poverty.
• Romans 13:8
  “Owe no man anything, but to love one another: for he that loveth another hath fulfilled the law.”
  Explanation: This verse urges us to avoid being in any kind of debt, which is one of the barriers to financial independence.
• Proverbs 14:23
  “In all labour there is profit: but the talk of the lips tendeth only to penury.”
  Explanation: Hard work leads to wealth, but laziness and empty talk leads to poverty.
• Proverbs 10:22
  “The blessing of the Lord, it maketh rich, and he addeth no sorrow with it.”
  Explanation: In the quest for financial success and freedom, we should seek God’s blessing.
• Proverbs 13:11
  “Wealth gotten by vanity shall be diminished: but he that gathereth by labour shall increase.”
  Explanation: True financial freedom and success is attained through honest work and integrity, rather than quick dishonest schemes that come with regret and unguaranteed future and potential for loss if found out.
• Proverbs 21:5
  “The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty.”
  Explanation: It takes time and diligence to accumulate wealth and riches. But quick money often leads to future losses.
• Ecclesiastes 11:2
  “Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land.”
  Explanation: It’s important to diversify your investments to avoid the risk of losing everything in the case of accidents and unforeseen tragedies.
• Proverbs 24:27
  “Prepare thy work without, and make it fit for thyself in the field; and afterwards build thine house.”
  Explanation: It’s important to have well thought out plans when it comes to long-term and short term investments.
• Luke 14:28
  “For which of you, intending to build a tower, sitteth not down first, and counteth the cost, whether he has sufficient to finish it?”
  Explanation: Proper budgeting and planning is important in achieving financial goals.

Topics and verses are generated from multiple resources and are reviewed by our team. If a verse or topic does not belong or is missing, please contact us. Scripture taken from the New King James Version®. Copyright © 1982 by Thomas Nelson. Used by permission. All rights reserved.

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