Your Income and You

Hi, take a few seconds and calculate the total of the income you've earned in 2014? Let’s move another step further; cast your mind back to the financial plans you had at the beginning of the year, the question is how many of those plans have you achieved? The common saying everywhere is: ‘ I earn so little’ but  the truth is there are so many people that earn far less than you, but have achieved so much with what they earn through the power of savings and investments.

I categorize people into three when it comes to money matters and they are:

LAI—Living Above Your Income,

LWI—Living Within Your Income,

LBI—Living Below Your Income.

Wait, before you quickly jump into conclusion on which category you belong, let’s look at the characteristics of each:

LAI—living Above Your Income: These people spend more than they earn. They are constantly living in debts or in and out of debts, they spend to prove a point; buy clothes and shoes of the latest fashion trends with high taste for designer brands, cars, jewelries, travel abroad etc. to inform people around that they are big boys and girls. In order to satisfy these insatiable desires you buy things on credit (both the things you need and the ones you do not need) and at the end of the month you are either broke or you risk being embarrassed for not paying. These set of people do not have savings at all. If you are living in this category, you cannot achieve financial freedom that you so desire.

LWI—Living Within Your Income: These sets of people do not owe and do not have savings. They spend everything on their pay cheque, nothing is reserved, though, efforts is made to save on a monthly basis, the only thing they have being able to achieve is living above debts, which they fall back into a few times because of unforeseen circumstances.  Like their LAI counterpart they are impulse buyers and people pleasers, they buy stuffs to fit in the society and they are often class conscious, which and in turn affects their savings ability. Individuals within this category should understand that we are different people with different financial needs and by comparing your financial needs with your colleagues you are missing it big time because it’s a personal thing.

LBI—Living Below Your Income, this is the last set and the most appropriate. They live within a strict budget (we will discuss it later) and they have a portion for savings every month, not impulse buyers even though they have needs and have interest in been trendy, they do not go overboard with it at the expense of their financial freedom. They save and they are sometimes tagged ‘Ijebu’ because every purchase will be analyzed critically before a decision is reached. Once paid, allocation of every penny is made based on priorities. This is the best way to live.

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May I quickly balance it, I am not and will not be an advocate of impoverished living all in the name of living below your income, all I am saying is you can live a better live under a strict budget.

Lastly, where do you belong? Be honest with yourself, can your financial projections be achieved with the way you handle your income? Think twice and make adjustments where necessary.