How you manage, spend, and invest your money can have a profound impact on your life.

Most salary earners complain of being out of cash just few weeks after pay day.
Quite often, you hear (or are guilty of making) comments like “my salary finishes in the same week of payment because I have pending bills to pay off”.

You will be left at the mercy of an unbalanced finance seesaw if you maintain poor personal finance habits; overspending, debt ridden with borrowings that are more than you can afford to repay, over saving (yes, it’s possible to save so much and starve yourself of funds to cover very basic and immediate needs).

The average salary earner will receive just a single credit (bank alert) per month and twelve in a whole year. However,despite unending financial needs, wants and demands, it is possible to ensure that your core needs are covered without feeling stretched, starved of cash and always in need.

Here are 3 tips to enable you apportion your salary to take you through the month and beyond:

STEP 1: CREATE A BASIC MONTHLY BUDGET:

A monthly budget is a great starting point to help you develop healthy finance management habits and gain better oversight of your finances. A monthly budget is simply a list of your expected income and expenses and it gives you a very clear picture of your earnings and expenses. This will enable you ascertain if your earning is adequate, perhaps your expenses are wasteful or poorly planned.

Have you ever created a list of all your sources of income and expenses? The following is a very simple template to help you create a list of your income and expenses:

Individuals with dependents, children, projects (building construction, further education) etcmay need to add more columns to the expense/savings section to set aside money for such plans. Also, if you have multiple sources of income, these should be entered in the income section.

STEP 2: APPORTION WEEKLY BASIC ALLOWANCE

Quite often, you hear people complain of lack of money to cover very basic needs like feeding and transportation. It’s common to hear colleagues bid goodnight to their managers with an additional phrase ‘Sir can you help me with something, I don’t have transport to come to work tomorrow’. This is very likely to happen when you do not identify your very basic daily/weekly cash needs. Therefore, we advise you to add the Transport and Feeding expenses together and divide by 4 to get your weekly allowance. On receipt of your salary, move this amount to a separate account. For our illustration, this individual should move N36,000 and withdraw/spend N9,000 weekly for feeding and transport for the week. With this allocation, you will surely have enough money to cover the very important but often ignored feeding and transport for the rest of the month.

STEP 3: MAXIMIZE YOUR SAVINGS

There are several ways to maximize savings rather than leave them idle in your bank accounts. INVEST! INVEST! By doing this you can achieve some short, medium, or long term plans. From the illustration we have N30,000.00 to be added to savings every month. Money set aside for future expenses like rent can in the meantime be used to make even more money before the “evil day” comes?

Consider getting the savings plans most banks provide such as recurring deposits. By putting aside N30,000.00monthly with a monthly interest rate of 3%,at the end of a year you would have savings of N360,000 and earned N70,200.00 interest on your savings.

For those who earn even more than the illustration above, treasury bills from the primary or secondary markets will be well beneficial.These bills are issued by the federal government through the CBN and can be bought from the commercial banks or from individuals who already bought and are willing to resell (secondary market)with interest rates as high as 13%.

We hope this has been a helpful read for you. For the tech inclined individuals, there are several free apps you can consider getting that come in handy with managing your budget and finances. These apps help you have a quick means of assessing and reviewing your income and expenditure at any point in time (thank goodness for technology right?).

Say no to the “Sir can you help me with something” phrase and be a financially independent salary earner.

YES YOU CAN!

Author: Akeobi Moro and Kelechi Chukwu