You Need a Money Management Plan
Managing your money is a major component of career success. To make sure you are getting the best advice, I consulted with my finance superstar, Ebele Nwaoduah to get you started on your money management journey. Keep reading…
How to Kickstart Your Money Management Plan
This is an introductory budgeting tidbit for young professionals. Managing your financial life is very important. Your money goals should be really simple:
- Live within your means by creating and sticking to a budget
- Save money - because life happens. Your savings allows you to handle any major life events (wedding, medical emergency, vacation, etc.) and also plan for retirement.
- Build an investment portfolio: make your money work for you by investing wisely.
So you got the Alert that money has been paid into your account - now what? The smart thing to do is make a budget. Yep, I said it, the B word. Sounds like fun doesn’t it?
How to Start a Budget
The most important thing about budgeting is discipline. Why have a budget if you won’t stick to it (or as close to it as possible)? Be realistic and practical with the allocations. Don’t say ‘oh I’ll budget N1K for food’ when you know that 1k can’t even buy you small chops (unless you are in a garri soaking situation…struggles are different).
Here are a few suggestions/guidelines for setting up your budget.
1. | Be clear about available funds
How much money is available to you for spending? How much money do you make in a month? Is this consistent income?
2. | Write everything down
As a budgeting rookie, writing down everything gives you an idea of where your money is going. Make a list of all your basic needs/ the things you can’t live without. Things like food, toiletries, transportation, and vex money (cause life happens sometimes) are necessary for daily living. Write out everything you can think of.
3. | Set priorities
Now that you have a list, rank them from most important to the least important. Rent, bills, food/groceries, personal upkeep, household expenses etc. Which of these items would you give the most priority? Write it down.
4. | Track spending
For about a week or two, monitor all you’re spending by writing down everything you buy. Keep spending to a minimum by focusing on just the basic necessities. This will help you learn how much things cost and how much to allocate to each ‘need’ category (food, transportation, book supplies, etc).
For instance, let’s look at grocery shopping. Before going to the market, make a list of all the food items you’d like to buy and set a spending limit (i.e 2K). Not only will you start paying attention to the price of food items, you’ll also look for cheaper alternatives.
5. | Evaluate spending
Now that you have a sense of where your money is going and how much is being spent, compare your spending to available funds and allocate accordingly. If your lifestyle is sustainable with said limited funds, fantastic! If not, make adjustments where needed. E.g with the food list, are there items you can cut out to save more money? Make the cut!
I’ll stop here for now in order to avoid information overload. The takeaway from this post is simple - Create a budget!
It will take discipline and some practice to get the hang of it. Note that a budget isn’t fixed and can be readjusted within reason. Another quick point, don’t be afraid to treat yourself once in a while. Just plan ahead and make room in the budget for the treat. I said ONCE IN A WHILE O!
A little pat on the back on your road to adulthood (which by the way is soooo overrated. Why didn’t anyone tell me to enjoy my childhood? "Le sigh"). I hope this was helpful. Keep an eye out for part 2!
P.S. You know what to do: Like, Share, Comment...make me famous....lol
Ebele is a Credit Analyst with over 5 years experience in the banking sector. Ebele’s professional journey began when she came to the States to get an undergraduate degree in Economics. She went on to get a graduate degree in Finance, and has worked in the field since 2010. She hopes to eventually run a corporation someday.