Mide was hanging out with his friends, Ibrahim and Uche, in their usual weekend practice. Ibrahim, changing the topic of discussion, started briefing them of a fintech app that allows for dollar-based investments he recently started using. He tried convincing them to join in, so he could get referral commissions if they joined with his code.
Uche was keenly interested in hearing all the details and was about to download the app when Mide interrupted. “Please hold on guys, where do y’all see this money to invest?” “From our income, of course.” Uche replied. “The income that is just enough to get by?” Mide asked with daze.
“Mide, you earn more than I do, and in the past one year, I have been able to grow my investments to about 200% of my monthly income. So, I’m surprised that you, of all people, should have funding issues with investments.” Ibrahim replied.
Well, truly, I earn high but that’s just enough to sustain me in the month. By the time I take in all my expenses and my luxuries are paid for, there’s almost nothing left. As long as I have a good job and I keep earning well, that’s my definition of being wealthy!”
“I don’t agree with you, Mide. It’s not about how much you earn, but how much of it you can use to generate income for yourself, even while you’re sleeping.”
“That’s some food for thought, you know!” Uche chipped in.
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Shall we leave Mide and his friends for a while and focus on us?
Earning well does not translate to wealth. If you earn well but use up all of it on bills, expenses and luxuries, you’re still far from being wealthy. You should allocate your income judiciously among your needs, wants and investments/savings. There is a common budget rule of 50-30-20 that states that 50% of your income should go to your needs, 30% to your wants and 20% to investments. While this is not a one-size-fits-all approach to budgeting, it serves as a guide to help you create yours. The goal should be to live a soft life, and at the same time put a wealth plan in place, right?
So, let me ask you, what percentage of your income goes to savings/investing?
To your financial independence and freedom!
