Saving With Your Small Income

Okay, I got to have a small discussion with a colleague of mine about money. He complained of how badly he has been managing with the little amount of money he earns which was stressing him out. I paid apt attention to everything he was saying as he narrated his ordeal.

Finally I asked him how much he was earning and he told me, then I asked him a piece of paper to write down his income as well as all of his monthly expenses. This is so that I could have a detailed information with which to guide him. You may please refer to my previous post on How To Budget Properly and Best Tips and Tricks for Budgeting to read up. The list below shows the summary for what he wrote down;

Income:

Income from Salary                               N150,000.00

Other Income                                        N100,000.00

 

Expenses:

Tithe                                                                                       N15,000.00

Rent                                                                                        N25,000.00

Utilities (Power, Gas, Others)                                                  N10,000.00

Transport                                                                                N25,000.00

Internet                                                                                   N10,000.00

Feeding for 2                                                                          N30,000.00

Total                                                                                     N115,000.00

With a total expense of N115,000, I made him realise he still has a balance of N135,000.00 (even though it is suppose to be N125,000.00 as he doesn’t pay his tithe correctly). He was very shocked to realize he actually had such amount of money in excess every month to play around with, yet he never had any savings.

Below is the advice I gave him and I am sharing with you today. So, should you be in his shoes, please apply the same principles and with time you would realize that the problem is not how much you earn but how you utilize the little you have. Have you ever wondered why some people whom you earn more than are achieving more than you are? Yes, that is the exact reason why and trust me, if you are not able to manage the small amount of money you earn now, be sure you are likely to do same by the time your income increases.

Okay, lets get back on track. I am sure you are very likely to have some bank accounts that are either dormant or not in use. If not, I mean if you have only one account (I am sure its not the case here), please go and open more accounts and please forget about the charges. If on the other hand, you have at least 5 savings accounts, here is what you need to do. Categorize the bank accounts into the following;

  1. Main account – This is the account that receives your salary on a monthly basis
  2. Savings account 1 – Main Savings Account with a high interest yield. One that has no credit card and cheque book. You may even write the bank to disable it on your mobile app, just so you don’t get to see the money and get tempted to use it. You may decide to move the money into a fixed deposit account or you may buy some Stock or Treasury bills.
  3. Savings account 2 – This is a second savings account where money that you are yet to categorize goes in. In this case, whatever is left from the #135,000.00 above goes in there.
  4. Utility bills account
  5. Rent account
  6. Dependent relatives account
  7. Other accounts

So, once you get paid every month, the first thing you want to do is save the amount of money you have planned to start saving, then pay all of your bills but should your bills not apply at the end or beginning of the month, please forward the money to your utility bills account as suggested above. Same goes to rent as well as other accounts. What you should have left in your main account is the running cost for the rest of the month. With this in mind, you also apply self control and with time, you would find your savings growing.

Please note that the above is only an example and may not necessarily be your case. All you need to do is fit in your income and expenses into the table above and you are good to go. As much as it is important to increase your income, managing your current income is just as important.

I hope you put my advice into practice. It has helped a lot of people and I believe it would help you too. Should you need further help, please feel free to contact me as I would be glad to help. Please don’t forget to like my page, subscribe and share with your friends. Cheers!

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