Expenses burden push many into financial survival mode
Financial expert recommends ‘10 percent rule’, proffers solutions
KUWAIT: The burden of expenses is making life difficult for many, pushing them into financial survival mode before each month’s end. Even with salary raises, saving money still feels like a daydream for those people. Financial expert Mohammad Al-Rashed noticed that the problem isn’t rooted in how much you earn, but in how wisely you manage your expenses each month. Rashed believes that this common struggle grew with the habit of spending without planning ahead, as he said, “It’s a big mistake to start spending your salary as soon as you receive it, and only save what’s left over.”
Right after you get paid, he recommended dividing your expenses into three main categories: savings, emergencies, and essentials, using what he called the 10 percent rule. That means putting away 10 percent of the money for emergencies, like unexpected medical bills or car repairs, and another 10 percent for savings and investments.
After allocating these rates for emergencies and savings, the remaining funds should be dedicated to covering essential monthly expenses such as school fees, rent, or debt payments. To manage these expenses effectively, Rashed suggested using “The four Envelopes Method,” dividing the remaining money into four weeks. For example, if you have 200 KD remaining, you will allocate 50 KD for each week, placed in separate four envelopes.
To ensure the success of this strategy, Rashed emphasized the importance of living within your means, saying, “Don’t live beyond your social level.” He highlighted the need for individuals to be honest with themselves and acknowledge what they can and cannot afford. He advised against trying to impress others by copying their lifestyle choices. “If your financial situation only allows for an average-sized house, don’t aim for a villa,” he advised.
After all, it remains important to always dream big by having ambitions to seek additional sources of income, hereby investment plays a significant role. Rashed discussed various investment methods, including deposits, stocks, cryptocurrencies, real estate funds, or business ventures. He noted that the best method depends on your goals, whether you seek immediate returns or are willing to wait by seeking long term investment sources.
Regardless of the method, consistency remains the key in investing, according to Rashed. “Be a real investor, not a speculator,” he urged, stressing the significance of patience in witnessing returns and goals attainment. Furthermore, he advised investors not to be afraid of market fluctuations, regarding them as a natural aspect of any market. “The primary focus should be on long-term growth,” he clarified.