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Personal finances basically involve two elements: inflows and outflows or income and expenditure. In short, it’s about managing the money that comes in or gets out of your pocket.

Hard economic times in this context mean difficulty to live within the financial means at your disposal.  Michael Hopf once said “Hard times create strong men, strong men create good times, good times create weak men, and weak men create hard times” and the vicious cycle continues. Hard times are known to be periods of innovation, creativity, breakthrough solutions and so forth. This is why Robert Iger avers “If you don't innovate, you die.”  You have to change or respond as the times change or else you will break.

This article covers four aspects namely:

  1. Understanding personal income
  2. Understanding personal expenditure
  3. Preparing for hard times
  4. Dealing with hard times

Let’s now delve into each of them

Understanding personal income or inflows

Here we are looking at how your personal income is earned and received. There are several sources of personal income namely:  salary/wage, allowances, rental, commission, interest, selling something you create or own, investments, gifts, pocket money, tips, agriculture (cows, goats, fruits, trees, food crops etc), the list can be very long.

The question is what are your sources and quantity of incomes that come into your individual personal pockets?

The reality is, the majority of employees have one major source of income (salary). Remember, the circumstances under which we operate have significantly changed: use of technology to do some of the work, Covid 19 effects, closure or scaling down of businesses, restructuring, retrenchment, ceasing a political office, increasing cost of living, among many other causes. Therefore, if you have one source of income, you are very close to hard economic times should these circumstances occur.  Thus, understanding where and how your money comes in, the frequency, the risks affecting your inflows and the diversity of your income sources is very vital.

Understanding personal expenditure or outflows

Expenditure looks at how the money you earn is used, spent or gets out of your pocket. Let me describe how we spend using a funnel.

This utensil has many uses but one of the main ones is to control the rate at which things come in and get out.

The funnel is wide at the top because it is presumed that what is coming in is in bulk and thus, there is need to control, regulate, monitor and check how it gets out.

This principle applies to our lives as well. Unfortunately, most of the funnels for our personal finances are upside down with few sources and quantity of income coming in and many diversified expenditures as described below:

The expenses can be as many and diverse as possible.  In my country (Uganda), this situation is worsened by the population structure, for instance for the year 2022, the population is as follows: 0-14 years is 48.5%, 15-24 years is 21.2%, 25-64 Years is 28.3% and 65 years or older is 2% (

This explains that the people who are working and earning income in my country are largely in the age bracket of 25-64 Years which is only 28.3% of the population. This straight away puts a strain on the working people.

Thus, this calls for deeper analysis and strategy to either find more sources and quality of income or manage our expenditures or do both at the same time.

Preparing for hard financial times

This is one of the challenging aspects, however, there are two aspects to it, a) managing the income and b) Managing expenditure. To do this, it is imperative that we categorise and understand the three crucial expenditure elements:

  1. Basic needs: Food, shelter clothing etc
  2. Safety needs: Emergency fund, savings, investments, insurance, medical cover etc.
  3. Desired needs: this is where you want to be. It can be now or in 5, 10 or more years. (This is where your dream car, dream house, dream phone etc lies and the strategy to achieve it.

As earlier noted, we all have three choices available to us: either to increase our income or control expenditures or do both co-currently.

Best practice guidance is that basic needs should be within (50-70) % of your net income, safety needs in the range of (10-20) % and desired needs taking (10-30) % depending on individual circumstances, ambition and risk tolerance levels.

I am normally asked what if what I earn is not even enough. I normally answer it as follows: What if what you earn is no longer there?

I therefore recommend as follows:

  • Liberate yourself as no body else will do it for you – set your own financial standards taking into account basic needs, safety needs and desired needs, best practice can guide but you are fully in charge of your personal finances. The worst standard is to follow other people with no clear focus of your own. Because, when they move very fast, you may not manage to follow them or when they stop, will you also stop or what happens? Therefore, you have to plan to run your own race. This means you understand: what basics, safety and desires mean to you and work on them.
  • Knowledge and skills – seek financial awareness and knowledge on an-going basis. Build your financial knowledge muscle as it enhances control over your finances and facilitates you to freely make better financial choices other factors remaining constant.
  • Expose yourself to real-life realities by learning and sharing from both the good and bad experiences from those who have seen it, faced it and got out of it or fell stack there.

Dealing with hard times when you are already in it.

When you are in hard economic times, it means you are having difficulty living withing in your financial means. These are some of the things you can do:

  • Quickly acknowledge the financial reality you are facing and accept it. Do not live in denial.
  • Revisit the three categories of needs: basic, safety and desired needs. Re-prioritise them more into basic and safety needs first.  Condition yourself to operate within them. Be open and more willing to take hard choices and options. You may have to sacrifice the desired needs like disposing off your luxurious car and other key expenditure areas. This decision will allow you to reorganise yourself.
  • Seek guidance from those who experienced similar or related challenges, remember, experience is the best teacher.
  • Pay attention to survival first – shape up and adjust quickly and begin to work on possible solutions.


Remember, that if expenses consistently exceed your income, you will be exposed to hard financial times in the long-run.  Acknowledge the situation and straight away revisit the categories of your priorities in three: basic, safety and desired needs.  “At first, they will ask why you are doing it. Later they will ask how you did it “– Blessy Monica. Be systematic and consistent and run your own race. Further, pay attention to the wisdom of Martin Luther King Jr.  who said, “If you can't fly then run, if you can't run then walk, if you can't walk then crawl, but whatever you do, you have to keep moving forward.” 

You can also read: Transition and Retirement Basics every Employee needs to know


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