Coming across this, you probably thought to yourself “what an interesting topic, I wonder what it has to say”. Well, we are right there with you. There are a lot of things you shouldn’t do with your money and even without reading further, you can probably outline about 20 things, (go ahead if you’d like to).
Trust me you’d have fun doing that because it was quite fun coming up with this list and we’d like to present to you the top 6 things we believe you must not do with your money. Have a fun read.
DO NOT BE UNINTENTIONAL WITH YOUR MONEY
Intentional living is important and it is something that has caught on over the years. To be intentional means to be deliberate in your actions and decisions. Basically, what you must understand from this is that you should not be impulsive with your money, whether in your spending, savings, and investment decisions, you must be deliberate. There is a popular saying that goes “failure to plan is planning to fail”.
It is necessary to always have a plan/budget for your money. Never leave your money to chance. Be intentional, be deliberate, and do not be passive with your money plans. To get started, you can focus on three steps; have a vision, create a plan, set limits. You can decide to be intentional with your impulse buying as well. When you create a plan and set limits and you do not go over that limit, even when you decide to splurge, you would still be on track to achieving your goals.
DO NOT MAKE LARGE PURCHASES WITHOUT CONSIDERING THE FULL COST
Part of being intentional with your money is to avoid large purchases if possible. Things like buying a car or land/homeownership should not be taken lightly. Even if you can afford the down-payment at that time, you have to consider the other charges and fees attached. If you can meet up with maintenance and servicing then, by all means, go ahead. Otherwise, it’d be best to review that decision. One way to achieve such purchase though, if your current earnings aren’t sufficient to support an extravagant purchase is to have a savings or budget plan for it.
Even if you cannot afford a financial advisor, there is a good number of mobile apps that would help you make such a savings plan. If you are the type of person that whenever you come upon ‘windfall’ or unexpected income, you’re already thinking of how to spend it extravagantly, you need to have a change of perspective. Before you think of buying that private jet or getting that car, you need to ask yourself if you are fully capable of maintaining it. Making rash purchase decisions can lead to regrets later.
DO NOT CASH YOUR PAYCHECK RIGHT AWAY
With the advancement in technology, most employees have the option to have their earnings paid directly into their bank accounts, rather than collecting cheques or cash. But no matter the form you collect your money; you must make provision for part of that money to be saved. Do not spend it immediately. You can automate payments such that a percentage of your monthly income goes directly into your savings account.
This helps to avoid the temptation of dipping into that fund because, “if you don’t see it, you won’t spend it”. Some companies provide retirement savings plans for their employees, a system whereby a portion of their salaries are deducted and paid directly into their retirement account. One such plan is the 401k, of which the Nigerian alternative is the Nigerian Pension Scheme, governed by the National Pension Committee (PENCOM).
(READ MORE: Cashless goes nationwide)
DO NOT PUT ALL YOUR MONEY IN ILLIQUID INVESTMENTS
While investments are fun, and a good way to build wealth, it is important to diversify and have variety. Remember the saying, “do not put all your eggs in one basket?”. The difference between liquid and illiquid investments is simply this; the ability to exchange something for cash. So the rate of liquidity is determined by how easily an investment can be converted to cash. Do not tie up your money by investing in illiquid investments. Your investment portfolio should be diversified.
DO NOT SHOP EMOTIONALLY
The fact that we are biological beings does not mean we should not make logical decisions. Do not fall prey to ‘retail therapy’. Retail therapy is a term that is used to describe the action of shopping to improve one’s mood. It is also referred to as “comfort buys”, often acquainted with individuals who buy during periods of depression and stress. You are allowed to get emotional and you are also allowed to deal with that emotion, but talking to a sales representative or clerk just to make you feel better is not healthy.
Their job is to make sales, not your welfare. This is not intended to paint anyone in any sort of way but rather, to educate you. Instead of making that trip to the store or browsing that online catalogue, it would be better for you to call up a trusted friend or family member and talk with them. You’ll thank me for it.
DO NOT SIGN A CONTRACT YOU DO NOT FULLY UNDERSTAND
A contract is an agreement between two people that is legally binding. Four essential elements that make a document legally binding are; an offer, an acceptance, an intention to form a partnership, and a consideration that usually involves money. It can be oral or written. When it is oral unless recorded, there is no solid proof that an agreement was made, but, once it is written there is enough proof.
So before you go ahead and sign that piece of document, you must be fully aware of the terms and conditions of your agreement. Yes, a contract may, however, be considered invalid for specific reasons, but the bottom line is that you should avoid any situation that would put you in any money problem. It is more rewarding to get professional advice than implicate yourself unknowingly.
With all that’s been said, the crux of the matter is that you must be intentional with your money. Only then, can you plan, only then can you learn from your mistake, only then can you track your money movements, be deliberate, make decisions and take actions with a purpose. Develop a relationship with it (a healthy one of course), get to know your money, go on money dates and your financial health will bless you for it.
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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The top money mistakes people make in their 20s
Below are 10 top money mistakes people make in their 20s and how to avoid them.
In your 20s, you are either in your last year in the university, just starting your career or setting up a business. Either way, you are still new to many things and just building up yourself.
Your 20s is the time you learn, make mistakes and grow. People say you can’t grow if you don’t make mistakes; however, there are some costly mistakes you should try to avoid. They might end up helping your growth but spoil a lot of things before then. One of such mistakes is money mistakes.
Money mistakes are made when you don’t have enough financial knowledge, and this can land you in debts you have to keep paying for, years after. Below are 10 top money mistakes people make in their 20s and how to avoid them. These tips would help you to make wise money decisions from now.
The top money mistake young adults make is emotional spending; Many spend to make themselves feel happy. If your happiness is tied to spending, you will have a problem trying to save up or plan for the future.
SUBSTITUTING GROWTH FOR MONEY
In your 20s, you are just starting your career. You will have many job offers with mouth-watering pay. It is only logical that you choose a job that offers growth instead of money, if you are interested in making more money in the future. You might want to start making enough “dough” now, but in the long run, if you don’t increase your value, you are going to remain stagnant.
“NOT CUTTING YOUR COAT ACCORDING TO YOUR CLOTH”
Young adults tend to spend more than they earn because they want to stay in vogue. This is a common money mistake many make. If you spend more than you make, you tend to run into debt quickly and become financially unstable. Your 20s are not the time to live in luxury (unless you can afford it) or buy the things you cannot afford. If you will save more when you stay with your parents than if you stay alone, why not stay with them? If cooking at home would save more costs than buying food from restaurants, why not cook at home? Don’t live beyond your means.
SITTING COMFORTABLY IN DEBT
Many young adults are comfortably sitting in debt. Understandably, some situations might warrant you taking loans like student loans or personal loans. However, it is a wrong move to stay in debt for a long time. You should save up or look for other sources of income to settle your debt. ‘Don’t sit comfortably in debt’.
NOT SAVING UP FOR EMERGENCIES
Emergencies are money-draining circumstances that are unplanned for. To prove that you are financially stable in your 20s, you should save up for emergencies. Young adults often make the mistake of not saving up for emergencies, hence, hitting them hard when it (emergency) comes.
NOT HAVING A FINANCIAL PLAN
For every facet of life, it is essential that you have a plan; however, having a financial plan tops it all. Having both short and long-term goals shows that you are serious about being financially stable.
NOT KNOWING THE DIFFERENCE BETWEEN “NEEDS AND WANTS”
The importance of knowing the difference between needs and wants cannot be overemphasized. In your 20s, you should know the things you truly need and the things you can do without. Your needs should be 90% of your budget if you are seeking to become financially stable.
RELYING ON ONLY ONE SOURCE OF INCOME
Have you ever stopped to ask yourself, ‘what if I lose my job?’ or ‘what if this business crashes?’ It is very risky to rely on only one source of income. You are most energetic in your 20s; it should be the time you take on different jobs to earn more money.
As a young adult, you must track your spending always. There are many tools and mobile apps available to do this. Track your spending to make sure you are not spending more than you are receiving. You can do this by putting down your expected monthly income and plan how you are going to spend it, including your savings and emergency fund to the expenses. This way, you don’t buy on impulse because you have a financial vision for the month.
NOT HAVING HEALTH INSURANCE
Many young adults don’t see the need to have health insurance, and this is a huge mistake to make. Health insurance gives you peace of mind and saves you from spending more. It also shows that you are concerned about both your health and your finances.
We have not only discussed the money mistakes people make in their 20s but also put out tips on how you can avoid them. You don’t have to make these mistakes too before you learn how to be financially stable in your 20s.