Happy Monday Morning! How did the weekend go? Mine was busy but fulfilling. I spent Saturday going over my finances and completing Day 9 of the Live Richer Challenge. Week 2 of the challenge focuses on Budgeting and Saving which for me means finding leaking money to move into my Wealth Capture accounts.
First task was to list virtually everything I spend money on monthly – from food to transport to bank charges and so on. I also included quarterly or bi-annually expenses like Gas, Car Insurance and so on. This is called a Money List.
Next, was to write down how much I spend monthly on each expense. To do this, I gathered my old receipts and shopping lists I could find, and also pulled up my account statement from the GTB Online Banking platform (I use GTBank) to work out how much I have spent on items over the past 3-4 months. The figures amazed me. Until you begin to write down what you are spending on paper, you won’t realize what you are doing wrong.
Finally, I added up my money list and subtracted the amount from my monthly take-home pay. I am sure you know my results…lol…I ended up with a negative balance. In other words, I have been spending more than I earn. Did I feel bad? Big time! But I promptly forgave myself. I’m on a new journey yeah? right. Let’s go on.
Day 10 – Sunday.
Task: Reduce your spending.
Basically, I critically looked at my expenses and identified areas I could be creative – such as bring my lunch to work, reduce/eliminate bank charges – and cut back on spending. The Challenge provides a template to write out your money list, current monthly amount and reduced monthly amount. The reduced monthly amount is how much you can conveniently save on each item.
For me, the goal is not to scrimp and shrink my life out of existence because that is a recipe for failure. I wont last a month. Doing this exercise, though quite time-consuming, boring and brain-boggling (I’m not a nerd for numbers) is a means for me to instill financial discipline and financial pro-activeness into my life – a very important and necessary skill for wealth management and financial freedom. If you have a tank full of water and you discover it is always running out after a couple of days, your first line of action is not to get a bigger tank but to look for leakages and stop them.
That’s what I have been doing – looking for leakages and I must say I found way too many. But I discovered various interesting ways to eliminate some excesses and do away with some expenses completely. One is to bring my own lunch and water to work which I started doing since starting this journey. I cut off subscriptions to magazines I barely read and programs I barely use. I have also found ways to eliminate unnecessary bank charges – that one really got me mad…lol. Another major thing I have done is to set a budget for wardrobe upgrade which is going to happen once a year. Anything outside that is a “No,Thank You, I’d rather invest into my future”. Lord help me. Until I get a job that pays me to look glam, I have no business trying to look like every magazine cover nor the Jones.
Day 11 – Monday
Task: Open Multiple Accounts
For today, the task is to separate your money. Ever made the mistake of putting money you wanted to save for a future use into an easy-access account? What happened to the money?
I have made that mistake several times as a result of laziness and procrastination. I must say that for me, saving money is not so much a big deal as blowing it on capital liabilities. Therefore, when I read today’s task I was really excited about doing it. The task says you should have at least three accounts – a checking account where you receive all your deposits like your salary, a Bills Account where you transfer your money for your bills and a Savings Account where you put money for emergency and other long-term savings. Further separate the Savings Account for as many savings goals as necessary. Separating money according to their purpose helps in keeping a tracking your progress.
Checking Account – check.
Bills Account – check.
Savings Account – this is where I have been defaulting and have had to identify all the accounts I have and how to maintain a consistent separation of the waters from the waters. What I am going to say is before you open any account, ask questions and get answers till you are satisfied. Na your money (It’s your money). Don’t just open an account then you begin to discover all sorts of exorbitant fees you have to pay on top money that you are saving. Important things to find out:
1. Minimum operating balance.
2. Interest rate on the account.
3. Possible penalties and monthly charges.
4. Access to the money in case of an investment opportunity.
5. Charges(if any) on standing instruction and any more you can think of.
It may be better to start out putting your money in a simple savings account than use any of the investment accounts that charge you almost half a thousand Naira (minus tax and others) to operate. Leave those for when you have acquired the bucks.
Sounds like work? Well, managing your future wealth now is more important than your 9-5. First up, you can do it. Secondly, get help. Talk to people you know have a wealth of experience in these things. You need to get a hold of your money today before the banks and other corporations get rich off you. Remember that money is a tool for you to accomplish your dreams, and the way you manage it matters a lot. What you have right now is what you need to start your way to financial wealth and freedom.
If you’ve gone through this before or are doing something similar, kindly share with me in the comments section. I always look forward to learning something new!