Do you earn a comfortable salary? If yes, then yay! Life’s good. But even a Warren Buffet or a Jeff Bezos still knows the value of being thrifty. It is a sure way of staying worried and stress-free, regardless of the financial crises that might take you unawares in the future.
Advantages of thriftiness
You must understand that “thrifty” is not the same as “stingy.” No, It’s something entirely different, and even more so, should be sought after.
On the one hand, the word, ‘stingy’ means being miserly, refusing to make your life easier and hoarding the resources you possess.
However, to be thrifty entails managing your money habits and learning to save. This could include:
- spending less on non-essentials;
- getting a better value at a low cost;
- avoiding borrowing to satisfy leisure purposes (such as buying a car, funding an extravagant wedding, going on pleasure trips, etc.); and
- borrowing only when in dire need or for investment purposes, and so on.
Without much ado, let’s get right to the benefits:
You become resourceful
You develop a keen sense for accomplishing more with less – a useful trait in any individual, be it, man or woman.
In a world of hardship and increasing scarcity, we all must learn to value what we have and use them wisely.
As the saying goes, “He who spends his money carelessly tends not to have it for long.”
You understand what matters and what doesn’t
Oftentimes, we might get carried away by what our peers are doing and try to mirror these trends.
However, don’t forget to cut your coat according to your cloth. Bother less about impressing your friends, and don’t allow yourself to be swayed into purchasing things you don’t really need (which may even cost you more money in the long run).
Practising thriftiness enables you to live within your means. You analyse your lifestyle and measure your spending habits to suit your earnings.
You give priority to more important things like taking care of your family, living a comfortable life, and investing for your future.
You are more prepared in times of emergency
Spending wisely means you will have something to fall back on in case of an emergency. If you always empty your account and live from paycheck to paycheck due to bad money habits, you will find yourself in a sticky situation should you lose your job or face some other unforeseen event.
You have a happier relationship with your spouse
Money problems are some of the top causes of marital strains. Therefore, being financially responsible makes you better able to cater for your family and prevent getting into squabbles with your spouse.
You Worry Less About Incurring Debt
Spending wisely implies that you won’t face the unpleasant situation of borrowing to cater to your basic needs. You sleep better at night knowing Mr Ade won’t come banging on your door come morning, demanding you pay him back.
You invest more
Being thrifty helps you increase your savings, which you can then use to make profitable investments. You, therefore, get closer to achieving financial freedom and retiring early.
You become more disciplined
Managing money wisely makes you a better person all round. You may ask how. Here are a few ways:
- You take better care of your health, since you know falling sick will cost you.
- You feed better by cooking your own meals rather than eating out.
- You maintain your personal belongings, including cars, work tools, clothes, etc., and ensure they last longer.
- You keep your living space tidy by not accumulating clutter – You purchase only the things you need, and sell or give away items you no longer use.
- You are able to pay off your debts promptly and give yourself a good reputation.
[READ FURTHER: 5 post-retirement ideas you should share with your parents]
Being thrifty means you use your money and resources wisely. It ensures you don’t live from paycheck to paycheck and that you have something to fall back on during a rainy day.
By growing your savings, you can have a comfortable life, whilst working towards financial freedom and early retirement.
Where to invest $10,000 right now
Entrepreneurs, financial experts and investment analysts suggest what sectors or assets to invest in if you have $10,000.
The upsurge in COVID-19 cases around the world has kept global investors flocking the world’s safe-haven currency at an exponential rate, the high demand for the greenback is coming on the high geopolitical uncertainty prevailing in today’s financial market.
Also, it’s important to note at the currency market, the U.S dollar remains king. According to the International Standards Organization, 90% of currency trading done globally involves the U.S. dollar, most crypto assets, virtually the most liquid commodities are priced in the U.S dollar not forgetting about 40% of the world’s debt is dominated in the greenback.
So Nairametrics felt it paramount to ask a hedge fund manager, entrepreneurs, and financial experts, about what sectors or assets they would invest in if they had, say, $10,000.
Their responses were revealing and diverse as they were varied—ranging from; buying global equities, local stocks, real estate holdings to investing in digital assets.
Gavin Smith, veteran trader, and managing partner at Panxora Crypto Hedge Funds.
I would scale into BTC $2,000 now, $2,000 when it comes off to $10,000, then add $2,000 at $9,000 and another $2,000 at the $8,000 level. If BTC then breaks above $13,000 I would buy any of the above orders that had not been filled of the remaining $2,000. I would put $500 into each of these four DeFi protocols: LINK, COMP, KNC, and OMG.”
DeFi is an exceptionally volatile market and these would need active management, but they represent an opportunity with exceptional upside potential. This is a market our analysts are building a profile in, to advance our DeFi hedge fund later in the year.
Debo Adejana – Founder, MD/CEO – Realty Point Limited.
I follow the investment wisdom that says, ‘invest in what you know and understand’. I know and understand real estate probably more than any other investment asset class.
So, the decision as per what I will invest in with $10,000 which should be upwards of N4m is simply; Real Estate. I will either do rental income property as part of a properly organized shared-ownership structure or speculate on land depending on how much time I have with the money. The reasons are very basic, real estate investments have been known to survive and surpass any and every challenge.”
Darlington-Morsi Onyemaka, Co-founder Quba Exchange Forbes Accelerator Cohort ’20.
One of the main pointers to a good investment portfolio is diversified across multiple asset classes which should be according to the investor’s risk appetite. Looking at my long-term investment strategy, real estate fits in perfectly for Ten-thousand dollar investment. My portfolio is already jam-packed with high-risk assets and Real Estate will do a great job at hedging the risk factors without minimizing profitability in any significant way.”
Francis Obasi Cofounder and CEO of Lead Wallet.
If I have a spare $10,000 right now for investment, first, I’ll invest 55% of the funds into new crypto startups being run by professionals and backed by companies like Coinlist; LID Protocol, and Binance. Second, I’ll invest 20% of the funds into Lead Token as there is still potential for massive growth in the coming months/years. Third, looking at the situation of Nigeria, and not knowing where the current protest (uprising) on #EndSARS is headed, I’ll reserve the rest 25% in USDC/USDT to hold against a potential Naira crash. I’m confident that there is every possibility that the Dollar will become scarce again in the coming weeks/months due to the ongoing protest, thereby returning instant gains for immediate spending on basic needs.”
Dapo-Thomas Opeoluwa Global Markets analyst and an Energy Trader.
“There are so many ways to invest $10,000. The real question depends on the investor. His risk appetite, his investment horizon, when does he or she want to liquidate? The answers to these now limit the options of investments. So for safe and long-term investments, I always advise investing in index funds, Eurobonds or the Nigeria International Debt fund. This is with the caveat that says ‘low risk equals low returns’. Also, I usually would say, invest in investments that beat inflation so you won’t suffer negative real turns.”
Victoria Njimanze Investment Analyst at a Nigerian Investment Bank
Well, off my head I’ll go with Bonds, cryptocurrency, Stocks, and then alternatives. I would definitely make my findings first, but I’ll make a larger portion go into Bonds say 40%, 30% in cryptocurrency, 20% in stocks, and 10% in alternatives like commodity market so as to have a diversified portfolio.”
Akinsola Esan, a credit risk analyst at Nigeria’s Tier 1 Bank.
Basically, the goal is to earn substantial returns on investments – dividends, capital appreciation, and secondly, beat inflation in naira which is currently about 12.85%. With $10,000, I’ll spread my investments across foreign equities such as purchasing and holding stocks of companies like Apple, Facebook, Google, Fastly, Nio, Amazon, to list but a few, and also buy some top-performing dollar-denominated Mutual funds such as Vantage dollar funds and some other ones recommended by Nairametrics. Lastly, I will look in the area of cryptocurrencies by investing as much in bitcoin, Ethereum, and other recognized Cryptos. There are some dividend-paying stocks listed on the Nigerian stock exchange as well, I will consider holding a number of them.
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Due to the present fickle nature of global financial markets, most financial experts interviewed above are unsurprisingly keen on mostly U.S dollar-dominated financial assets, thus reflecting the greenback’s dominance in demand amid the COVID-19 infection exploding at an alarming rate.
The five hidden secrets for investing success
These are the five main differences between making money, saving money, and investing money.
One of the popular questions I get asked all the time is this; how do I invest for financial success or how do I make wise investment decisions. Today I will show you how to invest for long-term financial success. There is the right way to invest and there is also a wrong way to invest. The right way leads to financial success and the wrong way leads to financial failure. This means that the same investment vehicle can make you rich and it can also make you poor. I know this because there is virtually no person that I know today who has not lost money in investing before.
To achieve financial success you must know how to invest without losing money and you must also master the three abilities necessary for investing success. The first ability is the ability to make more money and earn high incomes. The second ability is the ability to save big portions. And the third ability is the ability to invest your savings without losing it. These are the three secret formula for investing success. Unfortunately, only a few people know this formula or even thrive in all three areas. Many people are good at making money. They make a lot of money and save little or nothing. Some are good with savings. They save a lot of money but then lose it all through investing. And others are good at investing. They invest well but have little savings to make any significant progress. If you want to achieve financial success, you must thrive in all three areas. You must also know the key differences between them. There are five main differences between making money, saving money, and investing money. And these five are the hidden secrets for investing success. Let look at each of these five components in detail.
Secret No 1. Money making, saving money and investing money are different
Making money is a money-producing activity. Saving money is a money preservation activity. And Investing money is a money growing activity. To make money you need to solve a problem for other people and earn money for the problem you solve. To save money you need the discipline to live below your means and the self-love to pay yourself first. And to invest money you need some money and the right investment vehicle. Making money thus requires problem-solving skills, saving money requires the right attitude, and investing money requires money. So why you can make money from scratch with your skills. You cannot save from scratch or invest from scratch. To invest you need to save. To save you need money, and to get the money you need money-making skills.
Secret No 2. Investing Cannot Make you Rich
Investing does not have the power to make you rich neither does your savings. The only way to be rich is to solve the problem of many people. The richest people in the world are all problem solvers. They solve problems by creating products and services that meet a need. And their wealth is the reward for the problem they solve. There is no single person in the world today who made their money solely through investing or saving. The fastest way to create wealth is to solve problems for many people.
Secret No 3. Investing is a poor money maker but a rich wealth creator
Investing and investment vehicles are poor money-makers but rich wealth creators. While they can make you wealthy and increase your Net-worth they are poor income producers. Many people in the bid to make up for their lack of money-making ability try to force the responsibility of making money on their investments. They become aggressive, take unsafe risks, and put pressure on their investment to produce high returns. They are lured by “get rich quick schemes” and make erratic investment decisions. They do this in the hope that their investments will produce the income they need to be rich. But this is a recipe for failure. The purpose of investing is to grow your savings and produce passive income and not to make you Rich. Your job is to refine your skills, build rich relationships, learn about sales and marketing so you can make multiple streams of income. As you produce more income and invest more money your passive income begins to build up to the point where it can carry the weight of your bills. This is the point where you can begin to relax a bit. Until then, keep refining your ability to earn multiple streams of income.
Secret No 4. Investing can do five things for you
Investment vehicles have five capabilities and can do five things for you. The first capability is protection. Certain Investment vehicles can protect you from risks and emergencies. The second capability is passive income. Certain investment vehicles can produce passive income for you. The third capability is principal appreciation. Certain investment vehicles can grow your invested capital. The fourth capability is gambling. You can gamble with certain investments and lose all your money. And the fifth is sales income. You can get back your money with interests when you sell a profitable investment.
Secret No 5. Investing is easier than making money and saving money
Investing is easier than making more money and saving money. When you want to invest all you need is a clear understanding of where you are going, how to be safe on your way, and how to get there. It is like a car, you don’t need to know all the component parts in your car bonnet. But you need to know the fundamentals of driving a car, how to be safe inside a car, what to do to get to your desired destination, and who to call when your car has a problem. With this critical information, you can successfully drive a car. Similarly, you can invest successfully by just knowing the fundamentals of investing and collaborating with advisors and investment experts who know the tiny little details about investing. Only a few wealthy people in the world are investment gurus. They simply know the basics and surround themselves with experts that can help them. This is what you must-do if you want to achieve investing success. But when it comes to making more money and saving money the story is different. While you can learn how to make money and save money from other people. No one will make money or save money for you, you have to do this by yourself. Also, nobody’s skill or expertise will work for you. You have to develop your own skills and expertise to make more money and save more money. This makes making more money and saving money more difficult than investing. Nevertheless for you to be successful you must focus your energy and attention on making more money and saving money. You can always get help with investing and succeed in investing without being an investment guru.
Investing for financial success is the dream of most people. However, there is the right way and the wrong way to invest. The key to success with investing is to recognize the difference and understand the five secrets we have discussed in this article. The truth is your salary will never be enough to achieve all your goals. Your Investments will also not make you rich. You need to increase your ability to earn more income and save a major part of that income to thrive.
If you want to learn more about how to invest with total financial confidence or how to make more money and save more money we can help you. To learn more send an email to [email protected]
Great investing success is not about the amount of time you put in it but the knowledge and principles that govern your investing.
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Grace Agada is The Senior Financial Happiness Director @ Create Solid Wealth. She is an Author,and Column Contributor in Six National Newspaper. She is a contributor at BellaNaija, Nairametrics and Proshare and she is on a mission to help working-class professionals and CEOs become more financially successful. To learn more about Grace and how she can help you send an email [email protected]
Budgeting on a fluctuating income
Today, we discuss strategies on how to plan one’s budget, especially when you do not have a stable income.
One of the best ways to keep a lid on one’s finances is to have a budget and stick to it. It takes a superhuman effort to set up a budget and insist on not spending outside of it. Budgeting becomes much easier, especially when you know what your monthly income is.
But what about individuals who are either self-employed, freelancers, or those whose earnings are commission-based? How do these people budget on what they do not know? How can they budget on an unpredictable income and cannot be planned on as it depends on lots of variables beyond them?
Truth is budgeting can sometimes be assiduous, but budgeting on an income that is not stable will be more technical and more brain-tasking as one would have to be creative in his planning.
In this blog article, we would be filing out free strategies on how to plan one’s budget, especially when you do not have a stable income.
Always estimate that you will be earning very low
When your monthly earnings are irregular and depend on circumstances mostly beyond you, you would do well always to envisage that you will be earning a very meagre amount every month.
By basing your budget on the probability that you will be earning very low, you will be able to fathom items that should be at the top of your list. This way, you would be budgeting for the necessities, and you would have no room to think of items that would only be consuming your funds.
Calculate your monthly least expenses
You already have envisaged that your earning will be low; you must also calculate the barest minimum of your monthly incurred expenses.
Your monthly expenses would cover items like groceries, transportation, health emergencies, insurance, and other essential services you must cater to every month.
Calculating your minimum monthly expenses would also help you know how much you must earn to keep body and soul together on month by month basis.
Always have an emergency fund
One piece of advice that is even tenable with those earning a stable income is for everyone to have an emergency fund somewhere ready to be used when the need arises.
This fund could be used to handle health emergencies, house repairs, or any other kind of crisis that might occur during the period.
Without an emergency fund, you will most likely run into debts to keep up with handling these necessary expenses. You should always make room for an emergency fund in whatever you earn during the month as it could be a lifesaver in the long run.
After labouring for a month, it is only right that you pay yourself a monthly stipend for all of your efforts. This fee would help you to be able to save more money than you would be able to ordinarily.
Paying yourself monthly would help you to keep a leash on what your expenses are. In months when you can earn more than you might have envisaged, you quickly would be able to know what to do with such earnings rather than in periods when you never paid yourself, and you allowed undue expenses to eat the bulk of whatever you have earned.
Anybody who earns an unstable income has to do well to avoid debts. Debt is spending your future earnings now. And in your case, you don’t know what that future earning would be.
You might have gone ahead to over-borrow when you could be earning less. It would be best if you remembered that your earnings depend on so many factors, and they are not all in your control.
A client may decide that he does not need your services again, or he could choose to defer his payment or even cut your pay. If you had gone ahead to borrow, thinking that you would be making a refund with what you earn from that client, and any of the above situations happens. You would have ended up creating an avoidable mess for yourself.
So, if your earnings are not stable, try as much as you can to avoid debts.
Budgeting on a fluctuating income can be frustrating sometimes but if you follow the strategies discussed by the book, you should be able to confidently set a budget for your irregular income and live happily and without fear.
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