You may think that the best time to plan your expenses is after the credit alert beeps. But alas! This should not be the case if you intend to keep your salary or whatever might remain of it, until the end of month. The best time to plan is somewhere around the middle of the month, as anticipation builds towards the pay day, because what you intend to do with your salary is as important as the credit alert itself!
If you aren’t getting any salary yet, consider yourself lucky because this article found you at the very best time. Seeing that you do not have to learn from your mistakes like I did, thus fast-tracking your journey to financial freedom.
Having done the research, heard from experts and borrowed some lessons from my own personal experiences too – truth is, I have fallen victim severally to planning my expenses after the credit alert comes!
Hence I came up with these 7 tips on ways you can make your salary last longer.
WRITE OUT YOUR GOALS
You need to decide your financial goal(s) for the next month. By this, I do not mean decide your goals in your head or have it someplace at the back of your mind, lol. Rather, you need to write out your goals and place it where you can see it so you don’t forget all about it when you begin to bask in the bliss of a new salary. A sound financial goal may include plans to increase your savings by a certain percentage in the new month, expand your investment portfolio, pay off certain debts, etc.
KEEP TRACK OF YOUR EXPENSES
I had to do this for over a few months, tracking my expenses to the last Kobo. Okay, I might have exaggerated a little bit, but the point I’m trying to drive home is that you need to keep an eye out for where your monthly salary goes, in order to make sure you aren’t spending on the wrong things or using your hard-earned salary to fuel an addiction.
THE 50/30/20 BUDGET RULE
It can be written alternatively as 50/20/30. This budgeting method was made popular by Senator Elizabeth Warren, in her book, All Your Worth: The Ultimate Lifetime Money Plan.
This budget rule proposes spending 50% of your after- tax and tithe (for people who pay) earnings on needs; those things that are absolutely necessary for your survival such as food, rent or mortgage payment, healthcare and others.
20% of your earnings should go into savings and investments. Debt repayment is included here as well.
Lastly, 30% should be allocated to wants. They are those extra things that make life a bit more comfortable. You can include that new handbag, a new wristwatch, gifts to relatives, phone upgrade, etc in this budget.
It is important however, to know that in any case where 50% of your net income isn’t enough to cover your essentials for the month, you should know it’s time to cut down on wants or downsize your lifestyle. But remember that whatever you do, the rest 20% is absolutely UNTOUCHABLE!
COME UP WITH A BUDGET AND MONITOR IT
Having done item no. 2 successfully, you can now write your monthly budget. Your budget must include everything you spend on monthly, even money you spend on airtime and data for the month. You can begin from the essentials; food, transportation, shelter. There are a number of Apps that could help you do this effectively.
Good budget for example, is an app which helps you to plan out your monthly expenses and monitor your budget so that you don’t ever get caught off-guard by a bill or sudden expense. This is because as you receive your salary, you can set aside how much you need to run your expenses for the month. It also helps you spend money only on what is important to you.
ADOPT A SYSTEM THAT HELPS YOU STAY TRUE TO YOUR FINANCIAL GOALS
If you have any plans of meeting your financial goals, then you need to adopt a means of ensuring that you are disciplined enough to reach this goal. Setting aside a portion of your monthly income with the intent to save, and then spending it all before the next salary comes, is the story of a good number of Nigerian salary-earners. What with the ever-increasing prices of goods and services!
One of such system includes opening a savings account which you have restricted access to, where you transfer your savings and then leave your spend budget in your operational account. A more convenient method is the PiggyVest App which helps you save, and at the same time restricts your access to your savings, thus helping you reach your financial goals faster.
CREATE ADDITIONAL STREAMS OF INCOME
If you did everything mentioned above, but you still find it hard to keep your head above water, then you should consider creating additional streams of income.
Truth be told, sometimes a single means of income might not pay the bills as nicely as it ought to. The good news however, is that in today’s digital world, there are increasingly new ways of learning new skills and generating additional income without quitting your day job or feeling over-worked.
Therefore, if you are looking to create multiple streams of income, you should seriously consider putting your savings in mutual funds, starting a VTU business, learning a digital skill, investing in an agro-business, to mention a few.
Lastly, try as much as you can to stay out of debt. Imagine owing debts worth almost half of your monthly income? Thus the need to track your spending habits because continuing to live outside your means will only overwhelm you with debts.
An exception to this might be mortgage payments, but even experts recommend that before taking out a mortgage loan, you should have enough money, at least 6 months worth of savings stashed in your emergency funds account.
What do you think?
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