We are at that time of the year where we evaluate ourselves, think of ways we can grow, change and generally improve. One of the biggest decisions you’re going to make this year is to be in control of your finances.
Here are 9 things you should do to become good with money in 2020.
Create a budget
If you don’t have a budget, you don’t want to get good with money, period. You want to wing it. Well, winging it will never get you financially free. Creating a budget is easy because you ALREADY have one. Just print a few months’ worth of bank statements or export it to a spreadsheet then sort them according to the category to know where you spend most of your money. Then do that every subsequent month.
Build an emergency fund
Life is risky. If you’re gainfully employed, you need to have at least 3 months’ worth of living expenses in an account you can access at short notice. So that when things happen you have something you can fall back on. Seriously, this is mandatory.
Pay Off Your Debts
Seriously, being an onigbese should end. You’re an adult. People need to be able to trust you. And you’ll need that goodwill for your future endeavors. Go and pay off those you owe. That’s another mandatory thing. You can commit to a monthly payment to a lot of your creditors and cut down on your personal expenses until you’ve cleared it. It’s the right thing to do.
Automate your savings and investments
You need to be putting away a portion of your income every month for investments and savings. The best way to do this is to set an automated withdrawal and then forget about it. Rise makes this super easy and once our app is launched you should set an automated investment amount and the app will do the rest.
Plan for Retirement
Look, the years really do fly by. You’re not going to be working forever. You absolutely need to lay out a plan for retirement that includes investing consistently over a long period of time. As you earn more over time, invest more. This is one of those things where it serves to begin early since your investments will have more time to grow. You can start from just N20,000 every month invested in dollars (insert dollar investments 101 here).
Pay Attention to Your Career
Are you happy with your job? Are you performing above expectations? Are you growing and learning? Are you making enough money for where you’re supposed to be, your experience and abilities? Are you investing enough into your network, your further learning, books, seminars, etc? Look up ways you can become better at what you do, and contribute more to the organization you work for. That’s a great way to get raises and make more money over time.
Add At Least One Source of Extra Income
I know some people who work full-time jobs but still Uber on the weekends. They get to meet people, and add at least N5,000 to N10,000 per week in additional income (between N250,000 to N520,000 per year) that can go straight into your investments. Other things you can do include writing freelance, editing, programming, consulting, personal shopping, stylist, virtual assistant, makeup artist, interior decorator, name it. What skills do you have that could be monetized for an additional income stream? The more streams of income you have the more resilient and stable your income and the more money you have to invest.
Have a Support/Accountability Partner
A popular saying is that if you want to go fast you go alone, but if you want to go far, you go together. You want to get far financially and you already know it’s a slow process so you absolutely do not need to go alone. Get your friends to join the journey, talk to a mentor, get someone that you know will hold you accountable when you want to veer off course, or will encourage you when you start to feel tired. Investing, and financial discipline are team sports. That’s why we have a community on Telegram for people who want to talk to experts, interact with other investors or newbies and learn more with others. You can join the group here.
Yes, we want to switch our lifestyle from endless purchasing to disciplined saving and investing. But just like a cheat day allows you to stick to a diet longer, treating yourself every now and then allows you to continue to focus and be disciplined with your finances. Splurge on something small now and then. Go out with your friends now and then. Get a spa day, cos adulting is hard. Throw money at something or play it in the markets even if you lose just to see how it does. Bottom line is, your financial life shouldn’t be about all work and no play. Loosen up sometimes and just have fun.