How to manage your money on a low income

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The issue of finance is something everyone needs to take very seriously. It does not matter whether you are single, married, divorced or widowed. Everyone needs to have a thorough understanding of there financial in-flow and out-flow. Managing one’s finance especially when your income is low is key.

1. Draw up a budget

It all starts with a clearly drawn out budget to avoid impulse buying and wasteful spending. You never know what you can really afford until you have your income and expenses written down in black and white. Budgets help prioritize spending and give a realistic view of what is affordable. Preferably this should be done regularly either weekly or monthly depending on your spending patterns. It is important when drawing up the budget, to set aside a little ‘vex money’ for unforeseen expenses. Every woman needs to be armed with ‘vex money’ (also known as ‘Mad Money’ by black American Women) this is money that women traditional saved secretly as a lifeline for a rainy day e.g. bailing the family out of difficult situations when a husband was unable or unwilling to do so

2. Reduce your monthly expenses

If you look after the Kobos; the Nairas will look after themselves. If you keep track of how much money you spent on impulse purchases like food and snacks you’d be shocked to find out how much 200 Naira here, and 500 Naira there, add up to each month. Consider making packed lunches for you and your family to take to work/school and save towards planned expenses.

Tame the fashion victim within you! You know that irresistible urge to ‘keep up with the Ojo’s’. Turning your wardrobe into the ‘aso ebi gallery’ of all events gone soon makes your bank account a sight for sore eyes. It is not as important to buy clothes all the time, as it is to maintain the things we do have and look good in them. The same applies to excessive expenses on hair, bags, shoes etc. Always remember to live within your means and reduce your expenses as much as you can.

Professional financial advisors caution that the cost of accommodation should not exceed a third of one’s annual income. If you are able to live by these rules it would be a simple matter of time before you change status from Tenant to Landlord.

3. Shop around for a bank account that is right for you

There are so many banks out there but you still have only so much cash. Stretch your money by picking a bank that is specifically tailored to your needs. Indeed, not all accounts fit one. Shop around for a bank that complements your current financial needs. diamondbank is always a good place to start your ultimate search for the right bank account.

4. Smooth out your big bills

If like me you dread a certain month of the year because that happens to be the month certain large bills like your rent is due, reduce your anxieties by opening up a separate account for that particular expense and set up monthly instalment payments in form of a direct debit to ensure you are gradually saving up for the huge bill payment.

5. Get financial advice if you need it

Seek good financial advice before you embark on any business or decide to spend a considerable sum from your income.

6. Make saving 25% of your income a goal

Not everyone is fond of the ‘S’ word but it’s a life saver! Savings stops being an ugly word when we understand that we don’t just save for the bad times but also great opportunities too! Women need to cultivate the habit of saving because it’s really what separates the independent women from the needy girls (ouch!)

7. Make more money!

If your current salary is not meeting all your needs and dreams, then aim higher. Get a better paying job or find a way to make more money on your current job. You’ll need to seek out other means of making money which does not affect your dedication to your current job. You can do this through different means e.g. rent out extra space in your home rather than leave unoccupied spaces vacant; rent out extra rooms or boy’s quarter spaces in your home. Sell your skill or services, many people have skills and expertise that are not being fully utilized. Consider an online business to ensure you are able to clone your skills and earn multiple streams of income!