‘The B Word’

A budget is simply an estimate of income and cost over a period of time. Budgets can be prepared for an budgtindividual, a family, a business, a government and Country. So you may ask why should I budget? It makes your financial goals and visions plain. You may be saving for a New car, School fees, Medical cover, Food etc the list is endless. A Budget is a vital tool to help you get there. Below are some useful tips for budgeting.

 

1] Set out your financial goals for the year. For example I want to save (10-30%) of my income every month or I want to clear my overdraft in the next 3 months.

2] Make it Plain – so what do I mean by this? Get a pen and some paper, or open a word document or an Excel spread sheet and list all your monthly potential of income (salary, rent, cash back, bank interest, tax refund, tax credits,  bonus (reasonable estimate). Spoiler Alert! My UK peeps, please note that your interest free overdraft is not a type of income lol, I know the feeling but I can assure you, if you budget and stick to your plan, in short time you can be financially free and savvy. Check out Mint for more on this.

Then list all your monthly expenses, Rent, mortgage, transportation, food, utility and telecoms bill, food shopping, clothes shopping, school fees, social cost i.e. eating out, Christmas, Savings andbudget investments( technically these are not expenses ,however we can treat them as expenses for the purpose of a personal or individual budget). My next article will be budgeting for business so stay tuned. It may be a good time to get your bank statement out (say the last 3 months) and a highlighter pen so you don’t miss out any important expenses.

3] Now Tally up -There are several budget templates online like this comprehensive but easy to use one from Vertex42.  I am expecting three main results from this exercise.

I) Your Income exceeds your expenses (including savings and investments).

Fantastic, well done but except you are a business set out to make profits for shareholders  I will say, invest more- let that money generate further income for you. If you are looking for passive way to invest, there is a new trend of ‘Robo Advisors’ that make investing effortless. They offer an automated investing service that help people manage and grow their wealth through smarter technology for a fraction of the cost of traditional financial services.  Although this trend is very popular in the US, there are some companies offering similar services across Europe.

 

Betterment– US

Wealthfront –US

Nutmeg  – UK
Wealth Horizon – UK
MoneyFarm – Italy/UK
Vaamo – Germany
OwlHub – Germany
Moneyvane.com – Switzerland

SmartRand – South Africa

Robo Advisors are yet to be formally established in West African Countries, however there are many traditional investing/ brokerage companies including ARM, Zenith Securities, Investment one to name a few.

II) Your Income just about covers your expenses.

Great and well done, keep reading for tips to squeeze out more money so you can achieve those financial goals you set out earlier.

III) Your expenses are greater than your income.

Not to worry, remember it’s a new year, so muster up the strength and courage to overcome this shortfall.

4] So below are some tips, I have put together

In my last role as a Finance Business Partner, one the major aspect I loved about my role was working with business managers in delivering their budget, which is meeting the goals and expectations that had been set for the year.  This involves scrutinising every aspect of your budget and asking one question ‘what can we do different here’. So let’s give it a go with our personal budgets.

Income

  • Am I due for a promotion (internally or externally)? Can you negotiate an increase in my salary due to my outstanding performance?
  • Can I get a better paying job? (Please secure a new job, before you quit your current job- I can’t shout!)
  • Can I increase my working hours?
  • Can I get a second job (for a short while to cover my expenses (loans, overdraft, and credit card)?
  • Can I turn that hobby into a part time business?
  • Can I turn that part time business into a full time business (tried and tested)?
  • Can I rent out the spare room?

Expenses – Believe it or not, this is where you can make the biggest change to your budget. So let’s go through the same exercise

  • Rent, now except you are coming to the end of your tenancy agreement or in the process of downsizing or relocating, there might not be much room here for saving. With your mortgage you may be able to switch providers with a favourable rate. A 1% savings on your mortgage rate can make all the difference. Check out moneysupermaket if you are in the UK for comparisons.
  • Utility bills. You may be able to save some money here as well by switching suppliers. You will also save some money by cutting waste by switching to energy saving bulbs and turning of appliances after use.
  • Travel to work? Is public transport cheaper and faster? Ditch your car, Can you car share (pay for half petrol cost), Can you switch transport mode i.e. swap tube for bus or walk (if you live less than two stops away), Can you work from home?
  • Eating Out. If you eat out a lot then this will be an easy one for you to save money on. Can you cut your eating and drinking out by 50%, If you spend say £20 a week on take outs, you can save at least £10 a week on eating in, that’s an average of £40 a month and £520 per annum. You will also save money and effort by taking your  left over’s for lunch or meal prepping (prepping your lunch over the weekend for the week ahead.
  • Shopping (clothes, books, cds, makeup, perfume, shoes, kids clothes, pound store knick knacks, pet toys, Gadgets, mobile phones, electronics, designers wears, etc ) You get the message, remember you are trying to create wealth so that you can have things comfortably next year. Please don’t get me wrong the above are essentials for modern living but don’t have to be replaced every year or purchased in excess.
  • Holidays – I know a few people that travel out of the country at least 3 times a year. This is great if you fall in A or B, but if you are trying to create wealth, you will need to cut this down and explore other ways of relaxation or getting away.

Now that you have found ways of saving money and creating wealth you can readjust your initial budget for the obvious savings. Once done stick to your budget, the only thing you are allowed to do is out perform your budget. Please note a budget in concept is static for the period intended so make sure it is S.M.A.R.T. Specific, Measurable, Achievable, Realistic and Timely.

Bonus tip, one of my work colleagues and now good friend taught me this a few years ago when I was struggling with the overdraft. This is what she does and I did it as well and it worked. I used to be one of those people who never carry cash; I always had my debit/atm card on me and pay for 99% of my purchases that way. I used to wonder why she always had cash in her purse, we go out for lunch she pays cash all the time. She told me ‘Oyinda’ once I get paid Ienvelopes take out all the money I need for the month in cash and ditch my debit/atm card till the next month’. So what she taught me to do was once I had my budget for the month, get envelopes and label them individually for each expense , I had an envelope for lunch, petrol, shopping, gifts, bills etc I think I had over 10 envelopes  each month.  I only put money I have planned to spend that day or week not more than a week in my purse. What you find is that you are in control of your spending and you manage your cash more effectively. The result was I didn’t over spend each month and I always had some spare cash to spend at the end of each month.

There are loads of apps available to assist your personal budget. Nurture what you have to grow what you want.

So give it a go! If you have any more tips or contributions please comment below.

As always, your comments and feedback are appreciated. If you like what you read, please sign up for email notifications.

Many thanks xx

 

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New Year, New Me

New year, New me! A statement that is bound to set some eyes rolling. I believe most people have come to the realisation that, if one wants change one has to do it now, not wait months down the line or 1 January.  However, there is something about the New Year that brings hope, strength, confidence and reassurance. The realisation that I can have a go at it, can try for that promotion, can attempt to lose weight or can get closer to God. This year has to be different and for these the statement  New Year, New Me is all so true and relevant, rescued from brink of obsolescence.

I want to thank my readers and cheerleaders for your support. I wish you the very best in this New Year.

Now what better way to kick start the new year than to have your financial goals realized,  check out my new post ‘The B Word, subscribe and Happy New Year:)!

Blame it on the Dollar!

I was with a friend last week and knowing how money conscious I am, she thought to tell me about a recent encounter she had. She was looking to purchase an air condition unit, which was priced at N65k, two weeks later when she proceeded to purchase the same air condition unit, it was priced at N76k, up 17%, when she asked why such a drastic increase she was told it was the Dollar.

naira_dollar

Photo Credit: www.yohaig.ng

It has been an interesting change from the UK where prices of commodities are not so volatile. In Nigeria you can be talking to a street seller or hawker and when you query the price of an item for instance, why so high, they would say it is the Dollar. Sometimes I may be cheeky and ask what do you mean by it’s the Dollar and they would just smile and say dollar na, e don go up? Nigeria is highly dependent on the import market, I would say about 70% of what you buy in Nigeria has been imported and so buyers and sellers have a hard time keeping up with the fluctuations.

Anyway, so I thought, how can we beat the dollar? How can we actually gain from the dollar? Do you know you can make money although a small fortune, depending on how much you initially put in?

Below are some graphs I have plotted to illustrate my point.

Please note the above was written over a week ago, however I just read today that the dollar is now N270:$1, although I believe this is on the black market and not the Bank or central bank rates. You can view the Central Bank of Nigeria rate here .

FEX graph

Graph 1: depicts the rates for the Dollar, Euro and British Pounds for the past 11 months in the year 2015.

In order to examine the fluctuations more vividly let us look at the the individual rates for each currency.

dollar

Graph 2: Dollar to the Naira from January 2015 to November 2015

The value of the dollar has been rising steadily from the start of the year, this implies a devaluation in Naira. We know the tale of the falling oil barrel prices, which is at all  year low of $34 per barrel.

cp-10yr-crude-oil-price-dec-18-2015

What this implies is that the revenue or income generated by the country from Oil will be significantly marginalised, in addition to the country weak reliance on importation will only advance Dollar value.

Tip No 1. My first tip to beating the dollar for those who have some spending to do in the new year is convert their Naira to Dollar now. The CBN  is working to stabilise the value of the Naira by keeping official exchange to the dollar between N196 and N197 to the dollar. Once you are ready to make your purchases you can convert your Dollar back to Naira. So if the Dollar appreciates the value in your Naira appreciates. That way you are flanked against sporadic increments.

Tip No 2. Open a domiciliary account. This allows you to transact in either Dollar, Euro or Pounds. it depends on which currency meets you needs. Many banks offer this service and accounts are  pretty straightforward to open. Now lets look at the Euro graph below to further buttress this tip.

euro

Graph 3: Euro to the Naira from January 2015 to November 2015

The value of the Naira against the Euro has been topsy turvy. In order to make some money, you need to have bought when the value is low say April 15 at N213 to €1  and sold say in October 15 at N222. If you had say €1,000 in a domiciliary account, you would have gained N9,000 ((N222-N213)*1000). That is a return 4.22% return on your initial investment. If your savings account is not offering such return (interest), this maybe the way to go.

This tip can be applied any where in the world, you can become your own trader and track changes in forex values but thread with caution and don’t get carried away.

Tip No 3. Keep calm and shop around. I understand not every has the time or tenacity to shop around like yours truly, but I can assure you there are savings to be made. Some retailers do not hasten to change prices of their goods due to sudden fluctuation in dollar, especially if they purchased at a favourable rate . Consequently you can beat the dollar by buying at a favourable price.

gbr

Graph 4: GBP to the Naira from January 2015 to November 2015

The good old British Pound, I think when I open my domiciliary account it will in pounds. I just understand it better  :).

As always your views, comments, feedback or questions will be welcomed. If you yet to sign on to receive this publication, please do.

Cheers x

Historic forex data from Oanda

Surviving Christmas

Christmas, a season to be merry, a season to be cheerful, a season of reflection, a season when a good percentage of folks top their generosity level.

No matter where you are in the world, except some obvious territories, you cannot  ignore Christmas , it is on your TV screens,  in the shops and malls, at schools and offices and for some of us, on our mind, as it reminds of the greatest love ever shown to humanity.

But shortly after Christmas is gone, approximately 8 days after we sometimes get a feeling of that was fun, it was great to have some family time, Christmas pressies, Carols, all those parties (office parties -don’t get me started on office parties, one word BEHAVE!) And then your next to nothing funds left to be stretched to the next pay date, which is always more than a month because most companies tend to pay salaries up to two weeks early!

OK, sounds all too familiar. Fret no more, below is my guide to surviving Christmas.

1.Shop Smart -Shop around, retailers at this time of the year are always trying to boost  sales especially those with an accounting year end date of 31 December. Offers are a dime a dozen, deals and promotions to be had.

For my readers in the UK, this would be the time to shop online and take advantage of those money off baits.

Sainsbury is offering £2supermarket0 off your £100  with code NBMMFA2 and  £15 of a £60 shop with code NBMMFAF on your first online shop. That is a maximum saving of 25% on your shopping on a £60 spend.

Waitrose also have some great deals where you can get up to £80 off your first five online orders

Ocado is offering 25% of your order using this voucher code .

I can hear my Nigerian readers murmur, ‘ok how that take concern me?’…lol There are deals to be bagged as well. This is the time to gang up and conquer. Get a friend, neighbour, colleague to bulk buy with you. The savings to

Image result for lagos markets photobe made could be as much as 50%. Markets in Mile 2, Mile 12, Oyigbo and my personal favourite Lagos Island are breaming with fresh produce and non perishables.Do make sure you wear comfortable clothing and shoes on such trips.

Readers in North America, Costco would be a great place as well to bulk buy and divide. This bulk buying is to tide you over to at least end of January.

2. Spend Smart – As a child, Christmas meant feasting with  family but also new shoes, a new dress (outfit), new hair do, new pair of socks, just for that day, just for those few hours.

There is absolutely nothing wrong with the Christmas splurge but if you are looking to save this season, rather buy several outfit , Jazz up  old ones with accessories or a new shoe or hair do. I bet you could save a few bucks. Dry cleaners can work wonders to an old outfit, you are bound to save at least 30% on your spending.

Image result for christmas presentsChristmas pressies-o boy, don’t get me started. Make a list, stick to your budget, avoid last minute buys, avoid using your credit card! Spend Smart, enough said. Do you know you can stock up on presents  a year in advance, just the day after Christmas you can save up to 70% on purchases.

3. Save Smart– Ok we are all aware of the time span between pay dates in December and January of a new year. For an employee this can feel like a life time . Business owners tend to struggle as well during this period because quite frankly, most people are spent come January. So my final survival tip, which ties into points 1 & 2, shop smart and spend smart save a little more.

Another tip would be to pay up some bills with extra cash, top up your utility bills, electricity, gas, broadband etc

Image result for grinch

So there you have it, my 3 step guide to surviving Christmas, without having to sound like this guy.

Shop smart, Spend smart and Save smart.

 

As always your comments and feedback will be appreciated and do sign up to receive post notification.

#Thankful

After what appears to be many months of procrastination, I have done it! I have taken the steps to share with the world my knowledge, know how, tips and even take you on a journey with me, so sit back and enjoy the ride 🙂

Procrastination! I will do it today, I will do it later, I will do it when this and that happens. We all have these moments some of us more organised than others however  what we lose is time, our greatest asset. Time is one of those things once lost, can never be recovered, however the beauty about time is it’s flexibility, It will allow you to stretch yourself as willing as you can use it. Time can be maximised.

As we approach another year, I would like you to reflect on the last 330+ days, the great times, the good times, the wonderful times, the not so good times, oh the bad times, the challenging times, reflect again and see what you have become of time. I personally had what I would call my most challenging year since my existence but on reflection I am thankful for those horrid moments, for all the tears, for all the trials, because this may sound as a cliché but it’s so true as you come out of the furnace, one becomes stronger, resilient, brave and dare I say happier!

As a person of the Christian faith, the Holy book, encourages to give thanks at all times. So I am thankful.

Back to time! Do it now, make a to do list, do not wait till the 1st January, do it now and tick off as you go along!

I will be sharing with you life tips, financial tips and Business know how periodically, so sign up to receive notification of post and please leave your comments. I hope to grow and learn along the way.

Thank you for reading this with your valuable time and please do not forget to be Thankful xx