It’s good that we have been able to fully clarify the concept of money. (To read on module 1, click here). We can therefore move to the next module of financial literacy which is “Controlling the now”.
Before we proceed, let me make one thing straight. Financial literacy is not limited to those who earn tons of money, therefore, you don’t have to wait till you have a lot before considering yourself financially literate. You can be financially literate in whatever phase you are in. I remembered a time in my life when I did think that when I start earning well, I will start using the financial literacy principles I had learnt over the years. But at that moment, I’ll just archive it somewhere in my memory and then bring it to play when the money starts coming in. But as time went on, I started realizing the truth, that financial literacy cuts across all phases and I could be financially literate even at the phase I was in.
This module addresses the need to be able to control your finances even at the stage you are in. It’s very funny how some religious people do not manage their finances well, keep falling into debt and then expect God to do miracles. I do believe in God and believe that He does miracles but I also believe in someone doing the right thing. Take control of your finances. Fine, there are times emergencies come up that will require us believing God for a miracle, but for mismanaging your finances and expecting a miracle, that’s unwise.
For some others, they have so much dwelt in the “world of fantasies” that they neglect the reality. Don’t mishandle your finances and expect that some knight in shining armor will come rescuing you.
So, in whatever stage you are in, strive to ensure that you structure your expenses in a way that is accommodated by your current level of income in order to avoid personal debts. With this in place, you’ll realize that you can spare an allocation for investment periodically even at that level of finance. You don’t have to wait till you have the tons of money before you do that.
Stop living in the world of “when I have enough money, I’ll do this and I’ll do that”. Instead, with your current state of finances, do that which you desire, with the proportion you wealth can afford. It will help you curb frustration. This life is too short for you to keep waiting for the perfect conditions before you make a move.
Live within your means of income before you try to increase your means. Gain control over your spending habits
Plan according to your current level of finances. Don’t try to impress anyone. Avoid falling into debt and blaming it on your insufficient level of income. In that level of income, while you are working on increasing it, live within it. Likewise, if you have found yourself in any form of debt, work on repaying it rather than avoiding it. Stop giving excuses or stop hoping that you will get one magic money like that (Fine, that happens sometimes, but then, you don’t want to jeopardize your reality for fantasies). From your level of finances, pay back your debts, no matter how little you are paying it. Before you realize it, you are done paying it. Also, start early so that you don’t get to the stage where the repayment of the debt is choking the life out of you.
Control your finances now while you work on making it better!
- Make a budget of your monthly income. Next, make an allocation of an amount you can set aside for investment (We will discuss this more in a later module). Then, build what your expenses should be on what’s left. (Your previous month’s expenses can serve as a guide). Your expenses should be in percentages. This will help you realize that some expense class are taking up more percentage of your income that it should. It will also help you realize that there are some expense class you can minimize or avoid totally by using alternatives.
- If you have any unsettled debts, work out a structure of paying it back and start doing that.
Do ensure that you follow through this series diligently. There’s so much to learn.
We believe in you!
To your financial independence and freedom
Module 2: Controlling The Now