Most of the problems that people face financially is not making the money but spending the money. No matter how much you earn, if you do not spend wisely, you will end up spending more than you are expected to, and may end up being broke. So this is why your financial spendings need to be planned and then followed with discipline. You will be surprised that many of the people that live extravagantly do not even have much but they just lack the discipline of financial planning. Here, we will take a look at how to plan one's financial spendings.
1. Spend on necessities first
Before you spend money on your wants, you should have been able to spend on your needs first. It is weird to see people spend just to impress people who do not even know that they exist and when they go broke, they may become financially frustrated. The truth is that if you borrow just to buy what you do not need, a day may come when you will have to sell what you need just to survive. Yes, you have to learn to prioritise your financial spendings and always favour your needs first before you begin to consider your wants.
It is true that humans' wants cannot be satisfied, and that includes what people want to spend money on. However, you have to consider your financial strength at the moment, then use it to prioritise your spendings with your needs first. Imagine if you have spent on your wants and there is no money again to spend on your necessary needs, how will you cope? This is why you need to have a workable budget that should guide your spendings and you also need an extensive amount of maturity and self-discipline to be able to follow your budgets to the later.
2. Save for eventualities
If you spend everything that comes to you without keeping some in case of eventualities, then you are already running a very major risk. It is worthy to note that financial challenges may not give you prior announcement before they come, so you need to stay prepared for it. In the event of financial challenge, you will discover that you are your own greatest help. At least you should be able to help yourself to an extent before you expect external help. It is a mark of gross indiscipline for someone to spend everything that comes into their hands without making plans for tomorrow.
You do not have to wait until you start earning in 7 digits before you begin to save, it is a process that you have to start from where you are. As a matter of fact, if you find it difficult to save at your level, you may also find it more difficult to save when your level increases because it will come with extra responsibility. Saving is not a function of the size of the pocket but a function of discipline. This is why you will see people that earn mega bucks but before the end of the month, or if their salary becomes delayed, they will go borrowing, because they have no savings to fall back on.
3. Get a secondary source of income
There are times that you will discover that not matter how you budget and no matter how you have prioritized your spendings, the money will not be enough for your needs, talk more of your wants or even to save. At this point, cutting down further on your expenses may be counterproductive, so the only way out is to get a secondary source of income. If your primary income becomes unable to cater for your needs and your responsibilities, then you may need to complement it with another source of income. A friend of mine once said and I quote;
The cure of being broke is not necessarily to cut expenses more than it is required, but to have multiple streams of income.
The truth is, if your needs are more than your income, then wisdom should tell you that you need to get something more to do. I have a friend that works with the civil service commission and his salary was barely enough for him. However, when other responsibilities came, it became insufficient and to make it up, he had to start a POS business just in front of his house which he normally opens partly when he comes back from work and fully on weekends. To his surprise, what he earns from his POS business is almost his salary. Now he has two streams of income and the effect of the extra responsibilities has been cushioned. So you see, you do not have to depend on just one source of income when you can get more than one.
Thanks for reading
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Very interesting post, in my opinion, a great idea to spread out your finances is to have a couple of bank accounts that are responsible for different things, so we can set up fixed transfers and not think all the time about what we have to reallocate to what.
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This is a very nice and insightful comment. Thanks a lot for your valuable presence buddy
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You highlighted three important points, there is another point I think, and this is not satisfying other needs from a preplanned investmet. I think it should be a post I should develop
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