Personal Finance with Raphael- Adetunji’s Testimony

It was five days to Easter Sunday and we could never have expected what happened. At first, it was a light drizzle, then it became a downpour, so heavy that it flooded our house. All the rooms downstairs were affected, and our properties destroyed. As much as it was in no way a palatable experience, my family and I were fortunate in that it wasn’t a budget disaster. Many of our neighbours still grappling with their loses have not stopped asking how we were able to raise the N2.5m in costs that came with damages associated with the flood in just 2 days. My response……. Our Emergency Fund.

He went ahead to share with his neighbours how to set up an emergency fund.

What is an Emergency Fund?

An Emergency fund is a priority goal that every individual and family must fully set up before planning towards other financial goals. It caters to unexpected expenses or unforeseen circumstances. This fund is set up strictly for emergencies such as job loss, large medical issues, major auto repairs etc. It’s always best to be prepared as we never know what the future holds for us. Having an emergency fund is extremely important so you’re always prepared to deal with whatever life brings, whether good or bad. Such a fund is not for goals such as ‘buying her that red dress you would really like to see on her at your date tonight’ It is also not an account where you make withdrawals to fund Friday night bills when hanging out with the boys. No, emergencies only, please.

How to set up an Emergency Fund

  1. Create an account that is personally labelled an Emergency Fund. No account is called an Emergency Fund you would have to create one and label it by yourself
  2. Save up at least 3 to 6 months’ worth of your living expenses before you can claim that you have fully set up an emergency fund. It can be saved gradually until the advisable amount is achieved. If you earn N100,000 but you spend N50,000 every month therefore you must have a minimum of N150,000 to N300,000 in your emergency fund. Should there be job loss it is expected that this amount would help you maintain your current standard of living before you find another job within 3 to 6 months.
  3. It must be saved in a financial instrument that preserves the savings and is liquid that is easily accessible. This instrument must also be a high income paying instrument that you can access in not less than 24 to 48 hours.
  4. A money market fund is the most suitable investment instrument as it checks all the boxes stated in 3 above.

 

The post Personal Finance with Raphael- Adetunji’s Testimony appeared first on Realising Ambitions.

Source: Blog

How much are you losing?

Bala and Audu met in NYSC. Both from the northern region of the country, compelled to serve their fatherland in faraway Ondo state, it was easy for them to become friends. They had a good year serving their country and even landed jobs in the same organisation. As similar as the young men were, they differed in their attitude to money.  Bala was somewhat future conscious, while Audu adopted a YOLO attitude (You Only Live Once). He wasn’t particularly wasteful, he just didn’t understand why he had to ‘manage’ because of a very distant tomorrow or a rainy day that might never come. So, he saved only when he could and focused on enjoying a good life. Bala on the other hand saved 20,000 of the 100,000 they both earned in a bank account. He later discovered the benefits of mutual funds and moved his bank balance to a Money Market Fund. To make it even easier, he set up a direct debit to his account and decided to focus on the 80,000 he had left and completely forget about his investment.

About four years later, the organisation they were employed with secured a choice estate and offered plots of land to interested staff at a subsidised rate. Ideally, the offer was not for staff at Bala’s level, who had barely worked for five years and were hardly earning so much. It was a huge surprise for Audu when Bala not only signified interest in the property but also conveniently paid for it without a loan. Apparently, investing 20,000 in a mutual fund every month made the difference. Over the past four years, Bala’s monthly 20,000 had grown into over 1,5000,000 and he could easily part with 950,000 for the plot of land.

Wondering how he managed to save so much from so little?

He had saved 20,000 in a bank account for 7 months before discovering the money market fund. He therefore began his mutual fund investment with 140,000 and made additional contributions of 20,000 monthly for four years, gaining an average of 14% interest annually which was reinvested on his behalf. Imagine how much Bala would have if he had continued his investment uninterrupted for another four years? About 3,900,000! Not convinced yet? Calculate it yourself here.

That gives you a peek into how much your money could be making for you daily, if you were investing.

Wondering how people build emergency funds or save enough to expand their business, buy property, and achieve other such feats? This is how. A fraction of your income invested appropriately at the right time can get you the future you desire. We calculate time in terms of our age and achievements, but hardly in terms of money. Yet, the passage of time can have an incredible impact on how much money we have. The truth is for every day you delay in actualising your decision to invest, you actually lose money.

Every day that passes is an opportunity passing you by. Make the most of time, put your money to work now. Explore our Webshop to better understand mutual funds and discover other investment opportunities. You can also engage us with your questions and enquiries on Facebook, Twitter, Instagram or LinkedIn. Or if you prefer you can reach out to us at [email protected] or 0700 CALL ARM.

The post How much are you losing? appeared first on Realising Ambitions.

Source: Blog