A money conversation- Part 2


Hello Readers,

I hope the last write up was enlightening. Here’s the conclusion;

The second is spend
The second is spend

Quite often I hear the words “there’s nothing to save” or “it is not enough to save” so I ask a simple question which leads us to the next part of this grand plan, “what did you spend it on?”. The answer to this question indicates the priorities of each individual.

Everyone spends money, this is fairly obvious right? The question is what do you spend money on? The items you purchase and your decision making patterns indicate your preferences which can also be likened to class, social status and prestige. For instance, you purchase a 30dollar Kenneth Cole wrist watch as opposed to a 400dollar Apple I-watch(no bias they’re just examples) or buying a house in Banana Island or Lekki Phase 1. Both watches tell the time which has always been the traditional feature of a wrist watch but the I-watch obviously has extra features and “perceived prestige”. As with living in Banana Island has perceived prestige as opposed to Lekki Phase 1. Both are houses but the perceived prestige creates added financial valuation.

Spending is closely linked to value addition, people simply spend more on what they believe adds value to them. This is the same reason why food prices at a local “Mama Put” Joint is not the same as “Mama Cass”. This creates the need for the word most people dread, but every nation (well almost) in the world lives by-“BUDGET”. The second is spend

A budget is a simple 10-30 minute exercise that would save you the trouble of being broke in 30 days or more. It is your personal financial statement tracking your income and outflow or permit me, eventual outcome. A map in the financial desert and a light in financial darkness. It is your personal guide. Failing to set a budget is like writing an examination you never studied for. The analogies are endless.

Let’s make it a bit practical, you have your income which is not limited to monthly salaries but pretty much everything you earn in a month including commissions etc. You also have your SAVINGS and expenses of which the latter might be further broken down into the categories below in no particular order (expand as you choose):

Phone bill
Home maintenance
Car maintenance

The list of expenses gives a general idea of what you need to handle monthly. Ascribe realistic figures to each category and voila you have your personal budget.

The success of any budget depends on two things;
1. Discipline
2. Planning

You have to plan your budget and decide whether or not to stick to it. It is a task that isn’t for the faint-hearted but baby steps can become giant steps.

Spending is certainly fun and exciting but nothing bites harder than the reality of an empty bank account and unpaid bills. So whatever you do, don’t spend it all, “Save something”.

The third is invest
Invest in your FUTURE

There’s never been a more exciting time to invest than now. It’s the best time to invest, I insist. The stock market prices are trading below value, import substitution is on the rise, property prices are dropping…I can go on.
Why invest in a boom and reap gloom?
Why not invest in a gloom and reap a boom?

It’s important to state here that not all investments become profitable but you learn and actually invest in yourself through the actions you take. When you invest, you shield your money from inflation by making the money work for you to generate more money. It’s a basic principle; the best investment if I may add is an investment in yourself.

So, you have saved some money, the next thing to do is to invest some of it. Nigerian Treasury Bills are averaging 5percent for 91days the average savings account is about 3percent and fixed deposit rates are between 5-7percent. It will be wise to put some of your funds in Treasury Bills, Fixed Deposit or in other words a “fixed income money market vehicle”. The idea behind this is not just so you can’t spend the money but that the money is earning interest.

The major idea behind investing is the need to create growth. Money is like a seed, you can either plant it(invest), eat it(spend) or keep it(save). It’s fairly obvious that it would be best to plant(invest) so the seed(money) can yield a harvest(more money)so there would be more  to eat(spend) and keep(save) and replant(reinvest). I hope you can see why investing is mission critical to your succeeding in money matters.

Money ultimately is an exchange of value created by man. It represents what you get in exchange for what you give. It is an equation of sorts with value and money on opposite sides and the equality or inequality symbols in the middle. If you want more money you have to add more value, the relationship is proportional. It isn’t hard to understand why Mark Zuckerberg is wealthy or Bill Gates or even Dangote. Value addition is the key to wealth creation, you only purchase what adds value to you even if it is only a matter of perception and that is another conversation for another day.

About 'Joyin

‘Joyin is an experienced Professional Accountant. She loves her career as an accountant and hopes to improve the accounting profession with values such as Integrity and Objectivity. She trained as a professional make up artist at House of Tara, International. 'Joyin is also a wife to a fantastic man. This blog is a lifestyle blog which features Life Stories, Fictional stories, articles about make up and other topics that are of interest. Contributions from other writers and bloggers are welcome, as well. If you would like to contribute to this cause by sharing some useful articles, advice and tips, please mail mojoyin[at]arewa-ng[dot]com ‘Joyin looks forward to reading from you.

2 thoughts on “A money conversation- Part 2

  1. Killed………….very insightful…………Discipline is so so key and this one major character has been watered down a lot in all aspects of life. It cannot be overemphasized how important discipline is. With discipline a whole lot of problems would be solved.

  2. Kool stuff!

    We,ve read over and over about this simple tips that help someone straighten his/her finances; but I can tell you for free, as popular as it is so it is very difficult to comply with.

    I personally have a beautifully crafted spreadsheet to monitor my spending versus savings/investments, but quite frankly, we need something not so popular to help out – some sort of outside the box strategy.

    How do you turn down an emergency call for cash from a sick family member or sibling?
    How will you decide not to buy fuel at black market price if you must come to work, power your Gen etc?
    How will you shelve buying that Aso-ebi of that your cousin or aunt that was there for at your wedding?
    The hows are endless…


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