How to Avoid Going Broke on a ₦150k Monthly Salary

Financial freedom is preached by all and sundry, yet it is such a very difficult doctrine to practice. There are several hacks out there, but the one that truly keeps you out of the red is the Spend Less than you Earn hack. Once you can follow this simple rule, your financial freedom goal is within reach. In this article, you’ll get a practical guide to using that difficult-to-practice advice.

If this guide is followed routinely, you should be able to go through life on a boat made with money rather than drowning in debts.

To start, you should divide your income into 5 buckets: Investment, Needs, Fun, Emergency, and Growth.

NEEDS

You can put about 60% of your income in this bucket. If you don’t need it, don’t own it. A ₦2,000 shirt would most probably perform the same function as a ₦180,000 Gucci shirt. Why buy a ₦10,000 watch, when a ₦2,000 watch would do just fine on your wrist and leaves your bank statement in the green? Worthy-of-a-frame quote: “Cheap doesn’t mean it’s fake and expensive doesn’t guarantee it’s original.” It pays to eat meat in a ₦2,000 shirt than go hungry in a ₦30,000 shirt. It's not just worth it.

EMERGENCY

10% of your income should go here. This is your go-to bucket for an emergency - an unexpected expense.

This is the typical “Brother Chinedu! Mama is sick. Doctor said we need to bring ₦40,000 so he can start treatment” kind of money. Don’t interrupt the flow of cash into the bucket as it could be helpful in the future, else you risk being in a frenzy when there’s an actual emergency.

GROWTH

Have a new skill you’d like to acquire? A conference or seminar to attend in another State? A course to take? Then this bucket takes in 10% of your income just so you can afford an upgrade of your skills and knowledge from time to time. Upgrading your skill is an avenue to increase your income. You should never touch this bucket for any other purpose save for personal growth.

FUN

In the evergreen words of Chief Commander Ebenezer Obey “Alo wo ma jaiye, eyin le mo. Awon to jaiye lana da? Wan ti ku, wan ti lo”(One with money that refuses to flex, you’re on your own. Those that flexed yesterday are dead and gone).

You’ve worked hard for your money, and you’ve earned every right to kick back and enjoy a few moments doing whatever you can afford as fun. This bucket takes 10% of your income. But try to stay on course, because a little bit of alcohol here and there could bring down your defences and off you go ruining your financial budget and routine.

You can also save up for a year or two, and take that well-earned trip out of the country. If you can’t go to Dubai, not a problem, take baby steps and visit the Benin Republic; and if that isn’t affordable too, visit nice places in the country.

INVESTMENT

This is the most important part. The ability to put your money to work and grow your funds. Investments could be in stocks, real estate, cryptocurrency, or a side business. 10% of your income could go in here.

With stocks, one can apply either or both the Direct Investment Plans (DIPs) and the Dividend Reinvestment Plans (DRIPs).

DIPs is committing to a fixed plan monthly. Example: Every month, I will continue to buy Apple Inc. (NASDAQ: AAPL) regardless of its price with my 10% for the next 5–10 years.

DRIPs is about taking the dividends paid by a company like Apple Inc. (NASDAQ: AAPL) and use it to buy more of its shares every year. The best option is to apply both DRIPs and DIPs in your investment plan; keep buying shares with your 10% bucket and keep reinvesting dividends paid.

This might seem easy to say, but it is somewhat difficult to practice. I began practising the Investment bucket this month, by swinging 25% of my income that way. I don’t have much needs, toning down on my fun, so I’m left with emergency and growth. It will be a difficult journey, but I’m certain it would balance out once I keep at it for 3 months.

You can adopt other money-saving schemes as well: why take a bike when a keke is going that same route? Why eat out when you can go to work with homemade cooking? With these 2 hacks alone, I save close to ₦2,500/week, which ends up as ₦10,000 at the end of the month.

It doesn’t matter how old you are or how much you earn, you can always find a way to keep that extra change to keep you going until the next payday.

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