How is it that one’s “take-home pay” does not take one home? Akpan sat at his desk, head in hands, looking at his payslip. On the other side of the workstation divide, Lanre was smiling, looking at a similar pay slip. Akpan wondered what he was smiling at.
“Guy, what are you smiling about?” Akpan asked Lanre, “is that not your payslip?” Lanre looked up from the paper and gave Akpan a broad smile. “Do you have a secret formula to this thing? I see that every month you are relaxed in spite of the many bills to be paid”.
Lanre beckoned him over and showed him the file on his laptop. It was titled ‘Cashflow’. “What’s that?” Akpan asked, “I am not an accountant please”. “You don’t need to be an accountant to work with this. You just need a bit of discipline and frugality. I see that by the start of each month, you go borrowing, 2k here, 3k there and by the end of the month, these add up to more than half of your salary”.
“Why don’t you write out everything you need to spend on at the beginning of the month or maybe a week before salary is paid. Note what you have borrowed. Most especially, take note of your long-term plans. Two years ago, I decided that I was going to spend my vacation in the UK. I calculated what it cost then and knowing how Nigeria was, made provision for inflation. Every month I saved afterwards. I saved also for my house rent knowing that in twelve months, I will need to renew the rent. I kept a minimum amount in an account that has no ATM card, chequebook or internet access.”
“I also saved part of my money in a fund with one of the Insurance companies. That particular one, I started with two thousand Naira five years ago when I was a junior staff. As I rose within the ranks, I increased the amount as much as my salary and other expenses would allow.” Lanre showed Akpan the computer screen where over N1.5M was blinking. Akpan could hardly believe it especially knowing that both of them received the same amount of salary monthly.
Sometimes our genuine needs overwhelm us so much; other times, we are unable to identify the difference between our needs and our wants. We think that the more money we earn, the better off we will be. We think that if we earn more, we will be able to handle all our financial pressures but the truth is the more money we get, the more expenses crop up. We get tempted to buy so many things sometimes things we do not need.
According to the book ‘The Richest Man in Babylon’ by George Clason, true wealth is not gotten from how much you earn but from how much you set aside to save and invest and the simple formula is this… Save a portion of your money, move from savings to investment, control your expenses. Get another or multiple streams of income. Don’t be tight-fisted, give – to your church, family, community and the poor.
Have you been struggling with your finances? In what ways can you cut down on your expenses to have some free cash flow? What best savings and investment options are available for you? Share with us let us help each other grow.