It’s the beginning of March, and the first couple of months of the new year have already gone by, and your bill and bank statements can no longer be ignored.

But if you broke the holiday budget in December, don't panic: there are some simple steps you can take to start improving your finances and restore your credit score to better health.

It’s important to realise that you’re not alone. The World Bank’s ongoing survey on the socio-economic impact of COVID-19^[2], in collaboration with the Kenyan National Bureau of Statistics (KNBS) and the United Nations High Commissioner for Refugees (UNHCR), found that employment shocks in Kenya due to the pandemic created a huge reduction in earnings and that more than one in four households surveyed were seeking additional income generative activities in April to June 2021.

Joseph Nyaga, Chief Operations Officer (COO) at TransUnion Kenya, shares his top 5 tips to get 2022 off on the right financial footing.

Budget, budget, budget

The only way to get on top of your finances and avoid overspending in 2022 is to create an effective budget. It doesn’t have to be complicated: list your monthly income and your monthly expenses.

Once you’ve allocated the fixed expenses, like your home loan, school fees and credit card payments, you can set realistic budgets, says Nyaga.

Save something for a rainy day

Try to put aside a portion of your salary to pay for any unexpected financial crises, such as health emergencies or a major repair on your car or a household appliance.

That way, you’ll avoid having to access expensive credit to deal with unexpected expenses.

“It’s tough to save right now. But start small: even 5% of your monthly income can help you build up a nest egg that adds up over time. If you pay yourself first, it’s also easier,” says Nyaga.

Pay down your debts

Prioritise your debts. Pay your most expensive debts first. If you can, pay more than the minimum balance owing each month, or you’ll end up paying more interest than you have to.

If you’re going to battle to make all your payments, it’s vital that you speak to your lenders and restructure your loan repayments where possible.

Once you default on a payment, it affects your credit score negatively, and will hurt your chances of getting credit in the future.

Change your spending habits

It’s vital to manage your exposure to credit carefully. Make sure you pay off your full balance owing on your credit card every month. And if you want that fancy new big-screen TV, save up for it.

“If you’re financially stressed right now, you want to start planning how to avoid feeling the same next year. Your stress levels will thank you in 12 months’ time!” says Nyaga.

Get your latest credit report

Your credit report lists your current credit accounts, including credit cards, home, car and student loans. You can download your credit report for free once every 12 months from TransUnion and other credit bureaus in the country.

You can also request a credit report or access your Credit Reference Bureau (CRB) clearance certificate through TransUnion’s Nipashe, which allows consumers to easily access their credit information through SMS. Your first clearance certificate is free.