Peter and Nicole are friends who met at work. They are both Junior
Counsels at O, Pand Associates; a legal firm based in the bustling city of
Port Harcourt, Rivers State and earn the exact same amount in salary.
Peter had noticed that Nicole always seemed to achieve every goal she set for herself yearly, especially her money goals. For example, she had planned in 2015 to change her Toyota Camry 2003 model to the 2010 model by the end of 2016 and she did! Again she told him of her plans to join the Institute of Chartered Secretaries and Administrators of Nigeria (ICSAN) and study to earn the certification in 2018. Well, they joined the Institute together, but she has actually gone ahead to pay for her examinations, while he has not been able to afford it.
Peter has wondered for a while how Nicole is able to fund these expensive goals and every time he asks her, she says “I just included it in my budget and stuck to it. That thing is hard but I don’t have a choice jare”. Peter is still very confused!
What is a budget?
Simply put, a budget is a financial plan which means telling your hard earned money where it should go within a particular period of time such as a week, month or year. You earned it, you control it and tell it what to do and where every kobo/penny/cent of it should go!
To start, you should do the following;
- Write down how much money you earn over the period- yearly income, monthly salary. Be as detailed as possible.
- Determine what your needs and goals are: rent, feeding, transportation, toiletries, clothing investment, savings, charity, miscellaneous, etc.
- Divide your money realistically in a way that takes care of everything! You must be realistic because when you set an unrealistic budget, you can easily feel like you are suffering and get tempted to break your budget. Thus, defeating the aim of planning.
- Be disciplined and stick to the plan!
See? It is very simple!
Here are a few tips;
- Your rent should not exceed 30% of your income.
- Try to follow the 50-30-20 rule which states that 50% of your income should go to your needs such as rent, feeding, transportation, etc.; 30% should go towards achieving financial goals through investments and savings, while 20% should be set aside for your wants such as new clothing, leisure activities and miscellaneous costs.
- Periodically reward yourself for being disciplined but the cost of the reward should be taken from your miscellaneous ‘purse’.
Peter, you need someone to hand-hold you through this process, please do not
hesitate to contact us via email- firstname.lastname@example.org or call+234(0)811-890-3074. We will be happy to