"I Have Arrived" Syndrome
How to create and stick to a budget
“Sometimes earning more doesn’t mean you have arrived. You have just received the invitation to the party. Let’s say you get a promotion, a new job, sign a new contract, or a windfall hits your business.
All of a sudden, you have access to more money, and your brain has shifted gears to say, "I have arrived!" Nine times out of ten, you are just "pre-rich," but you’ve given yourself license to spend like a billionaire.
Your consumption rises to meet your income, and you become a revolving door for your money. So even if you earn a million naira a month, because you have stepped up your spending to a million naira a month as well, what you have left is zero.
So, if and when trouble arrives, your high income will not give you enough of a cushion to escape being broke because your finances cannot absorb it.”
— Smart Money Woman
I’ve only just noticed that I fall into this category. I started to increase my spending as my income stream started to grow. Even if it was planned, I was aware that having more money but more expenses would result in a dire financial situation.
Despite a rise in income, I had to come up with a plan to stick to my spending limit. Here are four strategies I’ve found to be effective.
1. Budget in percentages and not figures
There is so much talk from “financial experts” about budgeting, but so little is taught about how to create one, especially one that works. Last year, I educated my community on various budgeting styles, I even personalized ones based on different sources of income for easy application.
One of the many that have worked for me is the percentage of my income. There is a popularized financial rule of 50–30–20. 50% of what you earn goes to your needs (e.g., food, rent, etc.), 30% goes to your wants (e.g., luxury, vacations, etc.), and 20% goes to savings and investment.
The 50-30-20 rule is a standard guide; you can percentage yours depending on what’s important to you. I, for one, operate a 50–20–20–10 budget style.
2. Be disciplined
The wealthiest people I know are not those who have a fortune but those who do and have a disciplined lifestyle.
Curtail your appetite for wants; I have seen it ruin conglomerates. Not every new income should be spent on amassing new clothes, gadgets, or eating out.
Knowing how to say “no” is an important financial skill.
3. Spend extra income on needs and investments.
I have this habit of putting extra income immediately into my investments and savings. I do these for cash gifts, loan reimbursement, tips, etc. I have been doing it since high school.
Money doesn’t stay liquid in my hands for too long; either I spend it or invest it. Before I think I spend, I invest ASAP. The same can be applied to the extra money you get. You will be amazed at the compounding over the long haul when you invest.
4. Have varying accounts for your different needs.
I have five different accounts: a high-interest savings account for my normal savings, an emergency fund savings account for unforeseen circumstances, an investment account, my business income account, and I'm about to open my domiciliary account.
This has helped me manage my income. Immediately after I get an alert, I make funds available to these different accounts based on the percentage style of budgeting stated in number 1. Some of these accounts are already automated.
I hope you found this useful.
May he give you the desire of your heart and make all your plans succeed.
Psalm 20:4
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