A financial audit is a process of examining and analyzing your money habits—how you earn, spend, save, and manage your financial resources
Statistics show that a staggering 30% of mental health issues are financially based. That means nearly one-third of the mental health struggles we face are directly tied to our financial circumstances. Anxiety over debt, fear of financial insecurity, and the emotional burden of living paycheck to paycheck often contribute to depression, stress, and anxiety disorders. It’s no surprise then that debt and loans play a major role in this. People often feel overwhelmed by their financial obligations, making it difficult to see a way out. The strain of managing loans and accumulating debt can weigh heavily on one’s mental health, leading to feelings of hopelessness and despair.
An audit is typically associated with businesses and organizations, but in the context of personal finances, it’s just as crucial. A financial audit is a process of examining and analyzing your money habits—how you earn, spend, save, and manage your financial resources. For individuals, this means taking a critical look at where your money is going, whether you are accumulating unnecessary debt, and whether your financial behaviors align with your long-term goals.
Are you truly aware of how you handle money? Don’t see loans as your money; view them as temporary tools that need to be managed wisely. Respect money, and it will respect you.” Amos Ngahu
Amos Ngahu, a renowned financial advisor at the Heartbeat and Horizons event, presented a powerful challenge to GenZ, the young generation growing up in a world of financial complexity and fast-paced change. He encouraged them to conduct a self-audit on their finances. “Are you truly aware of how you handle money?” he asked. “Do you see loans as an extension of your income, or do you see them for what they are: temporary tools that need to be managed wisely?” Amos highlighted the importance of not viewing loans as “your money” but as borrowed funds.
Gen Z, more than any other generation, has access to quick loans and credit options, and this often leads to poor financial decisions. Many young people fall into the trap of accumulating debt without truly understanding its implications, seeing it as an opportunity to spend rather than a liability that needs to be paid off.
Amos Ngahu strongly emphasizes that borrowing for consumption is a dangerous financial habit. It’s tempting to take out loans for lifestyle upgrades such as buying the latest phone, going on vacations, or purchasing luxury items, but this can lead to a cycle of debt. Amos urges us to ask ourselves critical questions before taking on debt. “Why are you borrowing?”. If your reasons are not aligned with building your wealth or improving your long-term financial situation, it’s time to reconsider.
Instead of borrowing for consumption, focus on creating and sustaining a financial foundation that allows for wealth generation. This could mean investing in education, starting a business, or building an emergency fund. The goal is to make your money work for you, rather than the other way around.
Don’t spend money that you don’t have on things that you don’t need.
One of the most important aspects of auditing your financial culture is assessing your spending habits. Are you okay with overspending? Do you often find yourself making impulse purchases, or do you practice disciplined spending? Amos Ngahu argues that overspending is one of the key financial habits that lead to debt and financial instability. He urges individuals to become intentional about their spending. “Don’t spend money that you don’t have on things that you don’t need,”
Take a deep look at your budget, evaluate your expenses, and ask yourself whether your spending aligns with your values and financial goals. Implementing a budgeting strategy can help you prioritize essential expenses while also saving for future goals, ensuring that your spending is sustainable in the long run.
We all have a money personality, our natural inclination towards money management, saving, and spending. Amos Ngahu emphasizes the importance of understanding your unique money personality to better navigate your financial journey. He identifies several types of money personalities:
- Spenders: These individuals have a tendency to spend freely, often without considering long-term consequences.
- Holders: They prefer to save and avoid unnecessary spending, focusing on building security.
- Monks: Monks live a minimalist lifestyle, often choosing to spend as little as possible, even in situations where it’s beneficial to invest.
- Avoiders: People who avoid financial decisions altogether, often neglecting to check their bank balance or confront their financial obligations.
Amos stresses that understanding your financial personality can help you recognize areas for improvement. If you’re a spender, for example, it might be time to introduce more discipline in your spending. If you’re an avoider, it’s essential to confront your finances head-on and take control.
Another critical aspect of auditing your financial culture is evaluating the relationships in your life. The people you associate with can significantly impact your financial behavior. Do your friends and family encourage healthy financial practices, or do they pressure you to spend beyond your means? Amos urges individuals to assess their relationships and how they influence their financial habits. Surrounding yourself with like-minded people who respect the value of money and are intentional about their financial goals can lead to positive growth.
Ultimately, Amos Ngahu’s key message is about being intentional with your finances. Money doesn’t stay where it’s needed—it stays where it’s respected. If you want financial peace and stability, you need to respect money by managing it wisely, being disciplined with your spending, and making strategic decisions about how you earn and save.
Money doesn’t stay where it’s needed—it stays where it’s respected.
A financial audit is a powerful tool that can help you transform your financial life. By regularly auditing your money habits, identifying your financial personality, and intentionally managing your money, you set yourself up for long-term success.
Auditing your financial culture isn’t just about tracking where your money goes; it’s about understanding your relationship with money and making intentional decisions that align with your values and goals. Whether you’re Gen Z or from any other generation, taking control of your finances today will set you on a path to financial security and mental peace tomorrow.
