FINANCIAL TIPS FOR 2020
WRITTEN BY OLADELE ABIGAIL
It’s that part of the year when we start sending season greetings, we say ‘Merry Christmas and a Happy new year. This period is always associated with individuals making resolutions for the next year.
Here is a piece of advice; your resolutions shouldn’t be limited to changing your character, setting goals, making relationship…it transcends to making resolution to your finances. Yes, 2020 should be a year of financial stability.
Am I permitted to break some tables? I’d make it nice, never to worry. Have you ever wondered why you keep asking for monthly subscriptions and making a public announcement for it on your status? That’s because you didn’t have a financial plan.
Have you wondered why you got to December and found out you have no savings or little savings? I have the reason figured out, it’s because you don’t have a financial plan, probably you have…you didn’t stick to it.
As I mentioned earlier, 2020 is a year of Financial Stability. Well, you can say an Amen but it isn’t a proclamation. It’s all about you making it a year of Financial Stability.
As a nice person, I’d be giving you a Christmas gift by providing you with some tips to have a stable financial 2020.
When you receive your income, there are two things that you do with it. You either consume or you save; Economic theory confirms this. Your consumption and your savings play an important role in determining your financial stability.
If your consumption is high, your savings will be low and if your savings is low, your consumption will be high When I mean consumption, I mean all your purchases not necessarily foodstuffs. How you consume, how and what you do with what you save determines your financial stability.
Your consumption ranges from data subscription, getting foodstuffs, getting new clothes, your bank charges and many more.
In a more general term, your consumption refers to the goods and services you purchase. It has been confirmed that most people often consume more than it is needed or spend more than it is needed and this affects the financial health of such individual.
Well, if your consumption rate is high, you are doing Nigeria a whole lot of good as it adds up to our gross domestic product. However, it will affect your financial health.
Tips on controlling your consumption
The first step is to have a financial plan – it is not enough to have a goal of financial stability; you need to have a plan. A goal without a plan is just a wish.
Your financial plan should tell you the percentage you want to save and the percentage for consumption.
In managing the amount left for consumption:
- Analyze your spending patterns- you can draw up your spending plan on a paper- try finding how much you spend on foodstuffs, transport, how frequent you withdraw money from the bank. Basically, make a review of your financial plan in 2019. Where do you spend the most? What is your consumption to savings ratio?
- Identify your needs and wants. This sounds so familiar, wehave been taught this while in secondary school. Unfortunately, this haven’t been put to action.one reason we spend more than necessary is because we haven’t differentiated between our needs and our wants. Everything we see, we buy, everything we want, we buy. Get a pen and a note and list out the things you really need and the things you want ranging from monthly subscription, transport, foodstuffs -name them and apportion the amount you left for consumption to these items. You have to avoid frivolous spending especially on food and convenience items. Then apportion the percentage for consumption to the items left. Don’t be too hard on yourself while apportioning. Set clear, realistic and flexible goals.
- Always check your bank statement- this will help to monitor your spending pattern. Also it will help to inform your decision in withdrawal and making transfers. The amount charged as bank charges forms part of your consumption which you need to constantly check. Let me give an example, I noticed the amount given to me as my account balance was quite different from the amount I thought I had. I had to request for my bank statement. When I calculated the amount charged as bank charges, I knew exactly where my money went to. Make a plan on when to withdraw; every week, every two weeks?
Remember, a part of your income should be credited to savings. There is a saying that says Save first, spend next.
However, savings isn’t the goal to financial stability. Investment is the key to financial stability. The reason a lot of people save without getting rich is because they don’t invest.
You can invest in government treasury bills, bonds, real estates or buy a share. This often require a large sum of money but fortunately, financial institutions have made things easier for young people who can’t invest individually due to the large amount needed.
They try to gather individual amount which sums up to a large amount and invest it to yield returns. You can save your money and invest with such companies using their various applications such as Cowry wise, Kolobox, investnow, and many more.
One advantage is that you can invest as low as #1,000-#5,000 and receive 10-15% return annually.
In conclusion, economic theory informed us of the motives for holding money. They include transitionary motive, precautionary motive and the speculative motive for holding money. In making your financial plan- make sure to apportion an amount to these three motives. Keep a part of your income for precautions or unforeseen circumstances, keep a part for transactions, basically for your consumption and the other part has to do with speculative measures or investments. I believe these tips will help in giving you a financial stable 2020.
Happy new year in advance.
Written by Oladele Abigail
Oladele Abigail, an economics graduate of Bowen University who applies her passion for writing to her career path.
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