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Question
How do I budget monthly? How do I really know how much I spend in a month? Budgeting is something I find difficult. How do I go about it?
Answer
Let us assume you earn N200,000 a month, with all the bills yet to be paid, and you still want to be able to invest in this economy! Well, it is possible and the answer is to create a budget.
A budget is simply a plan for every naira that comes into your pocket. Some say it works like magic, but it has a lot of reasoning to it and represents more financial freedom, structure, accountability and ease. Here’s how to create a budget:
How to budget money
- Calculate your monthly income after tax. If you have side gigs, add them to your income too.
- Next, calculate your expenses. You can classify them under needs and wants.
- Your ideal budget must cover all your needs; some of your wants, especially those that add value to you; and money set aside for investment.
- Adopt the 50/30/20 rule as a simple budgeting framework for a start. Allow up to 50% of your income for needs, including debt minimums.
- Leave 30% of your income for wants.
- Commit 20% of your income to savings and debt repayment beyond minimums. Track and manage your budget through regular check-ins.
- It’s always a plus to have an accountability partner that keeps you in check. Ensure it is someone you trust with whatever information you will be sharing.
- Practice budget management by consistently revisiting it to reflect changes in your income, expenses and priorities. This means that you can adjust your budget to fit your current circumstance. For instance, if you do not have a lot of financial responsibilities, you can decide to save more than 20% of your earrings.
- Feel free to utilise technology to automate the process and keep track of your earnings and spendings. There are a number of budget apps out there to keep you on track.
Please note that there is no one-size-fits-all budgeting system, and budgeting can be harder for some people than others. Take your time to find out what works for you.
You can also join our community to gain access to a budget tracker and other helpful resources by signing up here
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Question:
How can I pay off loan sharks?
Answer
Loan sharks are illegal lenders who are not authorised or regulated. They may charge high-interest rates and use threats and intimidation against anyone who borrows from them.
There are several ways to pay off debts, which can sometimes feel overwhelming. Here are some tips that can help you pay off loan sharks.
- First, you need to trace how you landed in this situation, as this can provide valuable insights into your financial habits and decision-making process, and help you prevent similar situations in the future.
- Assess your debt load: Continue by determining the total amount of debt you’ve accumulated, including associated interest. Comparing this to your income will help gauge the feasibility of repayment, the expected duration, and whether additional income streams are necessary.
- Debt avalanche: This approach to debt repayment focuses on tackling debts with the highest interest rates first, followed by those with lower rates. By prioritising high-interest debts initially, you can potentially save money in the long run. Alternatively, if you’re motivated by quicker victories, consider the snowball method, which suggests paying off smaller debts first.
- Seek assistance from family and friends: Now is not the time to die in silence. It won’t be the easiest thing to do but you never can tell how much help you will receive from them.
- Renegotiate loan terms: If you have exhausted the above tips and still find it difficult to pay off these loans, the negotiation option may be worth considering. This can involve renegotiating debt terms or amounts to alleviate the financial strain.
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We often get questions regarding how to plan your finances to align with your relocation plans, especially for students seeking to further their studies. As always, we have heard you, and we have put together an e-book to help you navigate this. Follow this link, to get your FREE copy of the e-book: The Japa Encyclopedia.
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Don’t forget to:
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