November.6.17Budget‬
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Money Matters with Nimi
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October 10th was World Mental Health day. Money matters are often cited as having a direct impact on mental health due to the influence money has on our standard of living. It also impacts our continued involvement in many social activities.

When money is tight, we are placed under a huge amount of stress. Trying to gain and maintain control over finances can be daunting, and can lead to feelings of hopelessness, insecurity, depression and suicide. Money worries are often at the source of conflict within families and damage relationships.

Not having enough money, or not being financially secure, can trigger stress and worry about not being able to meet financial obligations.

Money worries don’t just happen overnight; there are usually early warning signs. By recognizing and acknowledging the cause of the problems, you can take deliberate and necessary steps to address them.

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REDUCE EXPENSES
There is no magic formula; you simply have to cut back on an already shaved budget. Track your expenses for a month; write down every single thing. You will be surprised to find that there is always something you can give up, if you prioritize. Little sums of money spent eating out every day add up; perhaps you can take a packed lunch to work some days. Are you taking advantage of technology to reduce your phone bills?

CAN YOU EARN ADDITIONAL INCOME?
Start by asking for a raise. If you are an outstanding employee and adding real value, most employers, if they can afford it, will do all they can to keep you. If this fails, it may be time to move on.

CAN YOU LEVERAGE ON YOUR SKILLS AND TALENTS?
Is there something that you are very good at and enjoy doing? Is it buried or are you leveraging on it? Be conscious of any potential conflict of interest and don’t cheat on your employer’s resources or time. The additional work or a side business should not affect performance on your day job.

ARE THERE GAPS IN YOUR SKILL-SET?
For example, IT skills are a necessity and are very welcome in a work setting. You don’t have to go for a Masters or other long formal program. The key is to start to invest in yourself.

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Do you ever feel like all you do is spend, spend, spend? N1,500 here, N5,000 there, N25,000, N40,000 with no respite, and worse, without really knowing what it went on?

SET SMART GOALS
Goals have a way of making you more disciplined and focused as you work towards achieving them.

KEEP TRACK
Establish a spending diary; tracking expenses for say a month gives you a clearer picture. N7,000 for groceries, N6,500 for diesel, N200 for your daily newspaper; write it all down.

BUDGET
Budgeting may be over-flogged, but it truly is a vital step to take; it is a tried, tested way to curb over spending. Keep things simple or you will abandon your budget. Find the right tool; there are many easy to use personal finance mobile apps.
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Click here to download our free editable budget worksheet.

More tips:

  • Shop with a list
  • Avoid going shopping with rich friends!
  • Plan ahead for windfall income (bonuses, upfront housing, 13th month)
  • Automate your savings

We all love to shop; indeed, it seems to be woven into the very fabric of our society.Overspending can destroy finances, relationships, even lives. Get back in control of your financial life and enjoy the sense of satisfaction, and fulfilment this brings.

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31st October is World Savings Day; it is an annual celebration of the virtues of savings and thrift. We all have a choice of either spending today or saving for tomorrow.

It is never easy, and of course, the state of your personal finances, family situation and lifestyle will determine how much you can afford to save and invest.

THE JONES
Sadly, there is so much pressure in our society to keep up appearances. Stop looking over your shoulder to see how well everyone else seems to be doing; by staying focused on your goals, you can work steadily towards them.

EMERGENCY FUND
It’s important to have emergency funds set aside to cover those unexpected expenses that come out of the blue; they will come! From expensive repairs, illness, job loss etc. Set aside about 6 months of expenses in an easily accessible account to tide you over the challenges.

PUT SAVINGS ON AUTOPILOT
Automating your savings helps; set up a monthly direct debit from your salary or current account to a savings or mutual fund account, preferably the day after payday.

It is only through focus, discipline, and consistency that you can commit to saving something, no matter how small, each month.

It is not how much you earn that matters; it’s how much you keep.

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Educating children is one of life’s big expenses. Those being educated abroad face the additional challenge of sourcing expensive foreign exchange.

How much can you realistically afford? If it is causing you stress and you are falling behind on a particular school’s fees, reconsider your options. Yes, you do wish to give your child better than what you had or the best possible, but it must be affordable, so you don’t jeopardize your health or retirement.

The truth is that the most expensive school is not necessarily the best for your child. Don’t feel pressured to send your child to a “fashionable” school because everyone else is doing so. It will be much worse if you are in debt and your child is sent home.

Look for a decent school that provides a safe, clean environment with qualified teachers, strong values and good pastoral care. Fill gaps outside school devoting your own time parenting and seeking extra help.

Encourage your children to take some responsibility and to compete for scholarships and grants.
Young people (not minors) should also invest in their own education by working during vacations to help cover at least some of the costs.

Have you considered educational insurance? By starting to plan early, you can afford much more than you think.

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Money worries are stressful but one of the scariest has got to be when the roof over your head is threatened.

Scenario 1
Rent is due, and you can’t come up with it. You face eviction.

Scenario 2
You have bought more home than you can afford and with current interest rates, the mortgage payments are killing. You face repossession.

It’s understandable that you might be afraid of telling your landlord, agent or banker that you’re going to be late with rent or mortgage payments. Don’t avoid them or ignore this serious problem; meet with them as soon as possible.

Be realistic; can you really afford to live in this particular house or apartment? Yes, it’s in the “right’ neighbourhood, the right sort of address, the right place for your status and family, but if it’s a noose around your neck you do need to reconsider.

Here are some thoughts:

  • Speak to your landlord and ask for some time.
  • Rent out some or your space to offset the costs.
  • Sublet to someone that can afford it (if contract permits)
  • Move to cheaper neighbourhood
  • Avoid borrowing to pay your rent unless as a last resort and with certainty of imminent inflow.
  • Be honest with your landlord or ender and try to renegotiate terms.
  • Depending on the market, you might be able to sell the property to pay off the loan and purchase something
    cheaper.

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Can you afford to retire at 60 and maintain anything close to your current standard of living? The transition from earning and accumulating assets to spending down those assets over what could be almost a third of your lifetime is daunting. Sadly, many retirees end up impoverished or totally dependent on their family.

ARE YOU DEBT FREE?
You don’t want to be paying off a mortgage and other debt with income diverted to servicing debt.

HEALTH IS WEALTH
You cannot afford to ignore your health. You can only really enjoy retirement if you have saved and invested wisely and remained fairly healthy with good insurance cover.

MULTIPLE STREAMS OF INCOME
A diversified portfolio including cash, bonds, mutual funds, stocks, business interests built over the long term should yield passive income from rent, dividends, royalties etc

POSTPONE RETIREMENT
If the numbers just don’t add up and you are fit and strong then delay retirement. Smaller ventures may wish to tap into your experience and expertise on a part time or consultancy basis.

Retirement should be one of the most rewarding of life’s stages. No longer the end of work life, it can be an exciting new beginning:

  • a new career
  • a new venture related to experience, expertise, interests or hobbies
  • back to school
  • a sport
  • quality time with children and grandchildren
  • focus on legacy and philanthropy

You are responsible for your retirement.
Do start planning for it now.
It takes years.

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Ask yourself these questions:
If you or a loved one fall ill, can you afford the best treatment or at least decent medical care? Do you have medical insurance in place?

If your car were involved in an accident can you afford to repair it? Can you afford to replace it? Do you have comprehensive or 3rd Party insurance?

If your house and possessions were damaged in a fire caused by a power surge, can you afford to replace its contents or the house itself? Do you have home insurance that covers fire, burglary, flood etc?

If you lost your job today, could you still afford to pay your children’s school fees or will you have to beg or borrow to keep them from being sent home?

If you have ignored your insurance, you are undertaking one of the worst investment risks; the risk of total loss. You have worked so hard, so why not protect what you have built over the years.

Do yourself a favour. In addition to your daily prayers, and for a relatively small premium, buy yourself some peace of mind and one less thing to worry about.

Call your insurance company today and protect yourself, your family, your possessions and your business.

Don’t wait for an incident to make the importance of insurance so glaring.
Get covered.

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Debt can become a huge burden that affects every aspect of life until it is brought under control. The early warning signs are usually glaring and include the following:

  • You are completely broke long before payday
  • You regularly have to borrow from friends and relations
  • You are missing debt payments
  • You are coming under pressure from lenders
  • Your money worries are keeping you awake at night

So how did you get to this point?
Is it your lifestyle?
Are you extravagant?
Do you make poor spending decisions?
Are you trying to keep up socially?
You just don’t earn enough to fund your lifestyle and obligations?

PRIORITIZE YOUR DEBT
It makes sense to pay off the most urgent debt that may have immediate consequences. Deal with the most expensive debt early to maximize your payments and reduce the amount of overall interest. Some prefer to pay off their smallest debts first, to quickly have sense of achievement that provides a significant psychological boost.

Be cautious about borrowing; it is better to borrow for things that have lasting value such as a home, education or business, rather than for consumables such as clothes and holidays.

Don’t wish away your debt.
Deal with it now.

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