Personal Finance with Raphael- Adewale needs help!

Personal Finance with Raphael- Adewale needs help!

Adewale Richards a.k.a. Bobo, as fondly called by his friends works in a bank on Victoria Island. Like many other people who work on the Island, he lives on the mainland. Every working day, after work hours Adewale will typically hang out at a bar or restaurant around his work place till late in the night under the guise that he is waiting out the traffic on 3rd mainland bridge. While hanging out, sometimes with friends, he spends between N3,000 and N10,000 daily, regardless of his bank balance or budget. Adewale has no savings whatsoever because he can’t see any surplus from his current pay package. At the end of most months, he is usually unable to give an account of what he spent as little as N5,000 on.  Therefore, he lives with the myth that he will soon ‘hammer’ or get some miraculous multiple promotion after which he can begin to save and plan for his numerous financial goals.

How can we help Adewale out of this situation?

Planning for one’s financial independence is inevitable. It’s not an option at any life cycle stage but a “MUST”. Adewale needs to identify his financial status by analysing his cash flow, income, and expenses. He needs to work with the budgeting tool. This tool will enable him to identify how he spends his hard-earned money and save him from his myth state. A budget would help him to put his funds to good use. Reality is that if you want financial security, budget is the only answer.

Setting up A Budget

Setting up a budget is very simple and friendly. All you need to do is write down how you intend to spend your income and stick to it. You state the amount you want to spend on each item. It helps you turn your finances around and begin to build wealth.

Importance of having a Budget

  • A budget makes you identify your goals, keep track of your progress and make your dream a reality.
  • Setting up a budget enables you to monitor how every dime made is spent to the extent that you don’t spend money that you don’t have. Thus, reduces one’s debt exposure. This would also help one to keep track of every spending.
  • It helps you set up your emergency fund. Following the 50:30:20 rule; 50% of your income is spent on your budgeted fixed items, 30% on variable items and 20% on your savings. Should there be any unexpected event that calls for immediate spending you can look at items in your budget that can be reviewed or moved to the next month or period in order to cater for the emergency. Flexibility can be applied sometimes to your budget.
  • It helps you cut unnecessary spending. It saves you from wasteful spending and impulse buying.
  • It helps you prioritize your spending. You would spend money on the most important items.

The impact of a Budget on Adewale’s life style is that he would be able to identify the surplus in his current income level by making amends to his current expense and hanging out bills. Following the 50:30:20 rule would enable him have savings and finally he would be able to account for every dime that is earned…. And when he eventually “hammers”, with a budget he can efficiently manage the increase in income and build the sort of wealth that would provide him a financially secured future!

The post Personal Finance with Raphael- Adewale needs help! appeared first on Realising Ambitions.

Source: Articles

Share on social


Copyright © Asset & Resource Management Holding Company (ARM) Limited. All Rights Reserved. Information on this website is provided “as is” without warranty of any kind, either express or implied, including, but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement. Some jurisdictions do not allow the exclusion of implied warranties, so the above exclusion may not apply to you.

ARM does not accept cash and will never ask you to make payments to a personal bank account on its behalf, nor ask you for personal account details, card details or passwords to your account. The acceptable means of payment are cheques, bank transfers, USSD & online.