Securing the Bag: Getting your Money Goals on Track
Money can be a touchy subject, depending on what your finances look like. At the start of the year, I made many conscious decisions about my spending, saving and investing habits and I hope to share some of them with you and how I’m on track with my goals. I’ll also be sharing the tools that help me stay on track.
Creating a Budget: I’m typically a spur of the moment spender. Most of the time, I can afford the things I spend money on, but I never take into account how much of a dent it puts on my disposable income. So I decided to start making conscious effort to spend less and live within a certain budget monthly. For instance, since I realized I spent a lot of money on Fashion, I started looking to buy cheaper/vintage clothes. I’ve also made a decision to reduce my transportation costs by ditching the taxi apps (I was spending an average of NGN 25,000 monthly on taxis). If you don’t have a car, carpooling is a reasonable option for your daily commute. I also tried to reduce the days when I eat out. All of these keep my spending to a minimum and so I have more money to save.
Save with a goal in mind: For a long time, I could only save my rent and a little extra yearly so I understand that within certain income brackets it is impossible to live a barely decent life and still have a little more to save at the end of the month. If you’re in this situation, don’t knock yourself up; things WILL get better. As my income grew, I started to save a little bit every month by simply moving money to my savings accounts. I’d eventually move this money back to my spending account if I had any needs. I also did ajo with colleagues from time to time. I noticed that for the Ajo payments, I could choose to receive payments when I wanted to handle a capital intensive project. It’s also a way of getting an interest free cash advance.
Use Saving & Investment Apps: As I always say, there is an app for everything. With the introduction of saving apps (like PiggyVest and CowryWise), I’ve also been able to structure my savings towards particular goals. Now I have savings for every possible reason, from the mundane like gift buying or birthday expenses to the more serious reasons like quarterly investments and real estate. If you stick to your plans, you also earn interest on savings (higher than the regular savings account interest). PiggyVest also has a spending tracker so you can check your spending patterns and stay on track with your budget.
Let Your Money Work For You: Once you’ve inculcated a Savings culture, the next thing is to let your money work for you. Last year, I tried investing in Mutual Funds and Money Market Funds. Although I had limited funds to play around with, I learned a thing or two about which options work for my available funds and my risk appetite. I’ve also learned to be creative with my investments – from short-term agro-tech investment plans to longer-term real estate plans. Last year, I invested in a friend’s fashion business and earned about 32% in profit over a period of seven months. My partner and I also invested in our side hustle and made a decent profit from sales. There are few investment clubs that help you pool resources with other people so you can have more high capital – high yield options to invest in. My advice to you is to get creative with investing in trustworthy ventures. However, be sure to read the fine prints and do all your due diligence before parting with your money.
Understand that it’s a Marathon, not a Sprint: Once you’ve put your money to work for you, you should understand that growing your wealth is a marathon and not a sprint. Most of the millionaires we look up to didn’t grow their money in a few months or years. It took years of making wise financial decisions and growing their income to get to that enviable point.
Rinse and Repeat: Investing is not a one-off thing. You don’t expect the N100,000 investment you make today to rollover into a million naira in a few years if you don’t keep adding to it. You have to keep putting the work in (or in this case, the funds) to grow your portfolio. Ultimately, beyond earning interest that’s higher than the inflation rate, the goal is to be able to live a comfortable life in the future.
Know any tried and true tips for saving and growing your money? Please share with us in the comment section.