It is a universally known truth, that some people exhaust their salaries even before the money hits their bank accounts. This is why it is commonplace for some people to start borrowing money a week after they have been paid – and it is not because their bank accounts are porous.
First, one must be disciplined, financially disciplined for that matter, in order to have and keep a healthy financial life style. The first step to achieving a healthy financial lifestyle could be following the listed bullet points.
- Have a list of your expenditure: You must be able to sit and recollect, as accurately as you are able to, what you spend your income on. You could have a daily list of what you consume, weekly list, or monthly list of your expenditure. This helps you to have a view on the sort of things you spend your money on. One way to do this is to have categories for your ‘spend list’. For example, you could have a column for food and groceries, another for entertainment, another for utilities, and so on.
- Find out how much your list costs: As you have written all the things you spend your money on, how much is this? One can also compare the categories to each other and see which has the largest ‘worth’. For a more than rudimentary approach, you could employ the use of a bar or pie chart to give a pictorial representation of your spend. Don’t forget to sum it all up.
- Next, write down your income: Yes, write it down. What is left of it when you subtract your total spend from your salary? What is left gives an impression of what you are likely to save, without an emergency occurring. With what is left you can project how long it will take you to buy that dream house or car. You can even find out if you can afford that trip.
What you do next after this is dependent on the result you get – if you are in the negatives, it means you should look carefully at what you have to cut out of your expenditure. Remember that everything has an opportunity cost, so do it wisely. However, you should not only cut out things you can without only when you run into the negatives, it could be that, you will be able to discover how to improve your spending habits and how to have a better remaining ‘balance’.
You may be lucky to have money left, but the main thing is, what do you use that money for? Do you save it, invest it or will you spend it? It is a good thing to save, but the best form of savings is to invest, so do not let that money to only sit in your bank account. Try and find something that will make you have turnovers. It is not only about buying shares in big companies or starting your own franchise. It could be as simple as investing in your dad’s shop.
Some say that money is not everything, but at least it gives some level of comfort and less stress when you have it. It is up to you to be properly disciplined in matters of your finances. It has nothing to do with how much you earn, rather, what you do with how much you save.
Have a good and healthy financial life style, for as Abena Brigidi puts it “Wealth is merely an instrument to help you live life on your own terms.”
There are many more ways I could not write about, but for financial tips and also information on savings, you can follow Abena Brigidi on Facebook, or invest in financial literature.
Questions are welcome.
My name is Kotey.