Who doesn’t love the sound of a bank alert? Soon, it’ll be the time of the month when salaries from working for over 30 days and monies from your business transactions, start to flood into your bank account. The thought of having the money in your hands gets you as excited as a child who had just been given a pack of biscuit. But as you wait in front of the ATM expectantly, rubbing your palms in anticipation, your mind starts to drift into a fear of paying the house rent, sending money home to your parents, buying that dream car you’ve always wanted and many other bills waiting on the line for your attention. And before you snap out of your thoughts, all the money you’ve worked for is gone!
If you’re always broke by the end of the month, you’re not alone. You see, tracking your expenses in Nigeria can be challenging, especially if you must cater to the needs of a large family. With the low minimum wage, the surge of job scarcity, the hike in the price of goods and services, and other expenses vying for attention, creating and keeping a budget becomes unproductive.
However, instead of living life one day at a time or waiting for a miracle (which may never come), what you actually need is a realistic budget. Knowing how your money is spent at the end of every month can help you live your best life in Nigeria, even if you earn chicken feed. Besides, budgeting is not just for people who don’t have enough money. It’s for anyone who wants to ensure that their money is enough.
HOW DOES BUDGETING WORK AND WHY DO I NEED IT?
Budgeting is the sum of money that you set aside for a purpose. It’s a plan that you create to help you know how much money is coming in and how much money is going out. Budgeting helps you to be in control of your financial decisions to avoid unexpected emergencies and surprises that may be lurking around. If you’ve been wondering why your money disappears in the middle of a new month, you can uncover the mystery by creating a realistic budget to help you track your expenses.
WHAT HAPPENS IF I DON’T CREATE A BUDGET?
Just as plants need air to survive, that’s how you need money for your existence. In fact, the three basic needs of man – food, clothing, and shelter – revolve around money. Money will help you cater to the things you care about, and this will boost your confidence and self-esteem in the long run.
Although having a lot of money to boast of may not make you happy, going broke won’t either; and what comes after that is a load of financial insecurities that affect your mental health. In this present time when everyone in Nigeria is focused on their personal problems, it’s difficult to find someone who’s willing to spare an urgent 2k to bail you out of financial crisis. Also, imagine working past retirement age with nothing to show for it – no savings, no investments, nothing. You’ll end up becoming a liability to your friends and family, which will affect your relationship or ruin it completely. Bottom line, no one wants a liability.
CREATING A BUDGET IS DIFFICULT TO STICK TO, WHAT DO I DO?
If you’ve been judiciously saving money at the end of every payday and yet you struggle with meeting your targets and paying off debts, don’t hit your head on the ground and assume that budgeting isn’t for you. Unfortunately, here’s what you’ve been doing wrong: After settling the household bills and spending money on yourself, you save the leftover.
Then, when you are hit by emergencies and unexpected life events, you blame your ‘village people’ for the bad situation. And this is why you’re always broke even though you earn hundreds of thousands of naira or a few bucks.
You may have come across a couple of budgeting tips and tricks on the internet, but they’re not working because you’re trying them all at the same time without dedicating the time to focusing on one idea.
With that in mind, here are 3 realistic budgeting tips to help you save money and live your best life in Nigeria.
SEPARATE YOUR NEEDS FROM WANTS: You can’t avoid emergencies, utility bills, rent, and other expenses. Even if your income doesn’t grow past a size, you will still have bills staring at you in the face. So, instead of depending on your intuition and spending money according to your income, first separate your needs from your wants.
Needs are the things that are important to keep you going – food, rent, medical care, insurance, utilities, and anything that you cannot avoid spending money on, are necessary to help you live and function. However, wants such as subscriptions, entertainment, destination holidays and more, are only there to help you improve the quality of your life. So, list your needs and wants to help you uncover where your money is going.
SET A SAVINGS GOAL: Not setting a savings goal is like crossing the Lagos third mainland Bridge with a blindfold. You won’t know where your money goes and what you spend it on the most. Since you’re creating a realistic budget that works, going all in to create an elaborate budget may not be the right solution to protect you from financial crisis.
To begin with, what are you saving for? If you have the answer to that, divide your money by 60/30/10 and make a list of your short-term and long-term goals. Your long-term goals may run for 6 months to 1 year depending on what you’re saving for. In this category, your needs come first and that’s where 60% of your money goes.
For the short-term goals, plan to save for 3-6 months for things you choose to do within this category. This takes up 30% of your money. Now that you’re left with 10%, whatever you decide to do with it is up to you. However, I’d suggest that you set it aside for unexpected needs that may arise. It’s good to be optimistic but it’s best to be realistic because you never know when a bad situation may come staring at you in the face.
ADJUST YOUR SAVINGS: Did your business make extra revenue this week? Did you get a salary raise? Have your side hustle fetched in some extra cash? Hold on, it’s not the time to spend all that money at Madam Koko’s bar or buy a new smartphone.
Depriving yourself of certain comforts may be challenging to stick to. However, if you want to meet your financial goals, you must be consistent and dedicated to achieving them. Failing to review your budget can lead to overspending or under-saving. So, if you’ve got extra cash, you may need to review your expenses so you can identify areas that need readjustment. Once that has been defined, adjust your expenses to meet your savings target.
BONUS TIP: MAKE YOUR MONEY WORK FOR YOU
If your money is locked away in a piggy box, or stored in the bank, you are selling yourself short. With the wavering economy and fluctuating currency value, making your money work for you will help you stay afloat financial crisis. There are many investment platforms to begin with but it might take a few experiments to find the right one for you. You can ask for reviews to see what’s working and what’s not. Still, it’s best to stick to what works for you to avoid stories that touch.
ur finances. Though it may be challenging to deprive yourself of certain comforts and lifestyles that you’re used to, not having a budget can cripple your finances and ruin your mental health altogether. With this in mind, you’ll never go broke in Nigeria even in a bad economy.
