BABAJIDE OKEOWO
Making money is one thing; successfully managing it is another. If you make money and you lack critical personal finance skills, then you are as good as not making money.
Below are some disturbing financial trends that should inspire you to rethink your money-related habits.These trends are worrisome, but if you’re mindful about the financial choices you make, you can avoid falling victim to them.
Not having a budget and not sticking with it if you have one.
Despite the fact that budgeting is one of the simplest money management tools out there, very few deploy this tool to good use. To start, list your recurring monthly expenses, from your house rent to car payments to leisure. Next, factor in once-a-year expenses, like annual membership renewals, and divide their costs over 12 months. Finally, compare your total spending to your total earnings. If you find that you’re spending down your entire paycheck, or, worse yet, spending more than what you make, then you’ll need to begin cutting back immediately – but having that budget will show you where there’s room to do so. Additionally, it is one thing to have and create a budget; it is another thing to stick to it come thick or thin. So, do not only have a budget, but also stick to it.
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Lacking emergency savings
We’re all supposed to have three to six months’ worth of living expenses in the bank to cover unplanned bills. Yet a frightening 40% of Nigerian young adults don’t have the savings on hand to pay for an emergency. If you’re one of them, it’s time to prioritise your emergency fund above all else, and that means cutting back on spending to free up cash to save. You should also look at getting a second job on top of your primary one if you’re starting out with far less than N1, 000,000 in the bank. Since the earnings from that additional gig won’t be earmarked for living expenses, you should have no problem sticking all of them into savings.
Impulsive shopping
You are taking a stroll on a cool evening and before you know it, your legs take you to your neighbourhood mall and in a couple of minutes, you stroll out with a plastic bag, bearing groceries, items, electronics you did not plan for previously. Give yourself a round of applause, you are strolling towards penury.
Impulsive buying has been identified as one of the habits that lead people to a series of dangerous spending behaviours, such as unplanned and poor purchasing decision. If what you buy is dictated by impulse, you may not make it through to another month end, let alone savings. You need to stop this to improve your spending and saving habits.
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Shopping to be happy
Without considering your meagre income, if your happiness is tied to your monthly shopping list, you’ll most likely have nothing to save. Shopping can be very sweet and addictive. If you don’t have control over your spending, you’ll keep deriving happiness in borrowing and get yourself sinking into deepening debts.
Expecting a miracle to happen
Some people spend their money recklessly, thinking some sort of financial miracles like lottery or money gift from a relative would hit their bank account. Others deliberately borrow thinking their stake in a lottery would someday earn them a jackpot. So, instead of expecting miracles to happen, just cut your spending, make a budget and save. The habit of buying more than you can afford is the chief reason you owe all your neighbours some amounts of money