Improving and managing your personal finance as a Nigerian is daunting, especially with the present economy.
For many people like myself, personal finance is a scary word as most of us live on “vibes,” hoping for a bigger paycheck or a miracle.
However, it is not supposed to be so, as managing your personal finance is an integral part of being a responsible human.
In this article, I’ll provide insight into personal finance, the process of planning and managing personal financial activities such as income generation, spending, saving, investing, and income protection.
I’ll also provide you with platforms and habits that can help improve your financial life. Let’s get started!
What is Personal Finance?
Personal Finance is a term that encompasses every nook and cranny of money management which includes income, savings, tax, budgeting, investments, insurance, retirement planning, etc.
Having a good knowledge and understanding of your personal finance is one great way to have a stress-free financial life.
How to Improve or Manage your Personal Finance
The 2019/2020 global pandemic and the global economic recession have left us sprinting to get a hold of our personal finances.
Resources and things that make us happy as humans have become scarce while wants and needs remain endless.
To effectively improve and manage your finances, you’ll need to follow these five methods listed below:
Keep track of your daily and monthly spending
Keeping track of your daily and monthly expenditures can help improve your finances in the long run, as this habit helps you to account for every penny.
There is a high chance that if you don’t account for or know what you spend money on, you wouldn’t know how to manage your income.
You also would not know how to improve and make room for better management of your personal finances.
Better financial management begins with an informed knowledge of spending habits. In Nigeria, you can track your monthly spending through your bank apps or saving platforms like Piggyvest.
Suppose you would like to stick with the traditional method. In that case, you can create a spreadsheet and track your spending on how much you spend on things like outdoor activities, fine dining, transportation, and other essential and non-essential activities.
Once you become aware of these financial spending and educate yourself on these habits, you can then make a sustainable plan on how to improve your personal finances.
Create a monthly budget and stick with it
Your daily and monthly spending habits and your monthly salary will determine how you create a sustainable budget that you can stick with until you get another monthly take-home.
To create a sustainable budget, plan your daily spending habits around your income. Take out your feeding money, transportation fare, and other amenities, then save and invest what you have left.
A budget should be viewed as a tool to promote healthier behaviours, such as cooking healthier meals at home, while still giving you a realistic chance to stick to it.
This is one of the ways you can improve and manage your personal finance as a Nigerian living in Nigeria on a strict budget.
Understand lifestyle inflation
The more money you make, the more you spend. Many people, especially Nigerians, follow this trend, thereby inflating their lifestyle.
When I say “many people,” I am also referring to myself. When my earning power increased this year, I suddenly remembered how I needed to change my wardrobe and buy new expensive household items.
While this can be good, it can harm your long-term financial goals.
The goal is to understand that you still need time. You might feel under pressure and start to believe that you have “arrived” and start dining at extravagant restaurants and buying pricey items like everyone else is. But that lifestyle may not be sustainable in the long term.
Your daily/monthly spending will likely increase as your income increases to support your social and work lifestyle, but excess spending is not a sign of success.
Have a savings plan
Putting aside money monthly from your salary is a great way to improve your personal finances. For instance, you can create an emergency fund on which you can always fall back when met with unforeseen circumstances.
It does not matter how much you earn; setting a small amount, say 5 percent of your income, can save you from difficult situations.
Saving platforms like piggyvest and cowrywise can help you achieve your savings goal easily and reinforce the habit of putting away money for future purposes.
Take advantage of opportunities and invest
To improve and adequately manage your personal finances, you need investment plans and hacks to help you save money in the long run and increase your cash flow.
To achieve this, critically evaluate what is available and remember to budget to keep your costs down in your financial plan. Then check out investment plans with a reasonable ROI to invest in or save for the accumulation of interest over time.
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Importance of Personal Finance Management
Personal finance is an essential part of not only your daily financial needs but also the planning of your financial future.
The sooner you understand how to improve and manage your personal finances, the better your long-term financial chances for investing or retirement planning. Below are some of the reasons why having concrete financial plans is important:
- It helps you understand money better and how to plan around it.
- It helps you to organise your savings and spending correctly.
- It helps you establish clear financial goals with clear metrics to follow.
- It helps you cultivate the habit of budgeting expenses to avoid excessive spending.
- Another advantage of having good personal financial management is being able to allocate resources and good use of the available cash flow efficiently.
To improve and adequately manage your personal finances as a Nigerian, you need skills to help you thrive and achieve financial success.
The good news is that you don’t need a degree to manage your finances successfully. You can improve by reading personal finance articles like this and listening to podcasts focusing on financial management.
As you do these, focus on the big picture and cultivate habits that can help you make better decisions resulting in long-term financial health and sustainability.
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Rabi Yahaya is a content writer whose works have been published by prominent websites in Nigeria.
Remotely works with local and international clients to create engaging content for brands. Creating compelling articles and stories that talk about issues concerning women. A budding SEO writer.