Saving on A Shoestring

Good Morning Nimi,

I’m writing because I literally don’t know what else to do and I am too ashamed to talk to anyone I know about this.

I will be 30 years old in a few months and I have no savings whatsoever…not even N1. I have been living a lie for so long giving the impression to others that I am comfortable and that all is well. I have no excuse; I have been working in a reputable bank for nearly 6 years and have absolutely nothing to show for it. Sometimes I save enough to go on vacation and then spend all my savings shopping. Sometimes I lend money to my parents or pay my sister’s school fees (she’s in a private school and things have been difficult for my parents). Recently, I made a N240,000 contribution to my sister’s wedding. I am on 3 bridal trains this year and have spent about N50,000 on each of them for aso-ebi. I have started to borrow from wherever I can and I live each day from salary to salary. a I am always broke before the end of the month and then count the days until payday.

I hate my job and cannot see myself doing it for much longer…I practically drag myself out of bed each day and the thought of being away from the job, even though I am completely broke, gives me peace of mind. I know my life will be hard without any source of income but at this point I almost don’t care.
I have actually been tempted to find a rich boyfriend, as there are men who are willing to fund my lifestyle. That is not me. I honestly need help, as I feel like I’m drowning and have no way to save myself. I read your newspaper column and writing to you seemed like a good idea.

Charity

Dear Charity,

Thank you very much for your email. I am touched by your story but want you to know that you are not alone in your plight. Many young Nigerians, even those who are fortunate enough to have a job, complain that they are broke before the end of the month.

Your admission of your financial problem is a very positive start as it means that you have resolved to make some fundamental change in your life. With determination and discipline, you can do it.

Remember, it is not the amount of money that you earn that matters, but how much of it that you keep. If you establish poor spending habits when you are young, it will be no different when you begin to earn a significant amount of money. If you are unable to save from the N260,000 that you are currently earning, it wont be very different even if you earn N1,000,000 a month. Here are a few tips to help you come out of this rut and begin to strive for financial security.

Track your spending

Start to write down every single thing that you buy, for a whole month; a startling picture will emerge of where all your money is going. When you do this, you will have a clearer idea what you need to cut back on or do without altogether. The traditional suspects are eating out, recharge cards, clothes, weave-ons and so on. 

Establish a budget

One of the best ways to ensure that your expenses are not out of control is to budget. List all your routine monthly expenses, and other spending, and subtract those amounts from your income. By making small, manageable changes in your everyday expenses you can make a huge impact on your financial situation.

Prioritizing your spending is essential. Of course it is nice to eat out often with friends but it doesn’t have to be everyday. If there is an item that you have set your mind on, ask yourself if you really need it. Shop with a list and try to stick to it. The key is to begin to differentiate between needs and wants, and being brutally truthful to yourself about what you actually need. 

Pay yourself first

As soon as your salary comes in, try to save at least 10%. Instead of waiting until the end of the month to see if you have any money left, put your savings on autopilot. Talk to your bank about setting up a direct debit from your current account to a savings account or a mutual fund account each month. This will be the foundation of your savings. It will need sacrifice on your part and will not be easy, but once you get started you will see the savings growing and this will encourage you to continue saving.

Don’t play Father Christmas

I admire your generosity and it is a wonderful privilege to be able to support your parents and siblings. However if you are bankrupt and become ill or depressed due to the stressful situation you find yourself in, or are forced to compromise, your family will be worse off. You must learn to say no. You cannot afford to pay for everything, and particularly not in your present financial state. When family and friends seek assistance, you must look at what you can afford and include that in your budget; provide them with some support but you cannot afford to wipe out your savings for a family wedding. If the bride and groom and other family members cannot contribute then they might need to work with a smaller budget or postpone their wedding. Assisting with your sibling’s education should be built into the budget as this will assist them in their road to financial independence.

Find Like-Minded Friends

Your choice of friends can have a huge impact on your finances. Try to select those who build you up and encourage you to achieve your goals. If you are constantly trying to “keep up with the Joneses” and go through life keeping up appearances you will have very little chance of financial stability and will continue to live from salary to salary and even worse if there is no salary at all. If your friends are causing you to spend excessively or make you feel bad about your efforts to cut back, you may need to withdraw. 

The art of saving is really a state of mind. Like any skill, it takes some effort and practice to improve. By admitting that there is a problem in the first place you are well on your way to solving it. If you are disciplined enough to commit to it in the first place, the process would already have begun. Investing even small amounts of money at an early age will grow into a significant sum over time; the sooner you start saving, the better.

I look forward to speaking with you on the telephone to see how you are doing.

Best wishes
Nimi Akinkugbe