Retirement: A Must - 1

When I see the aged begging on the road, especially in traffic my heart breaks, and the question that readily comes to mind is ‘what happened to them while they were in their prime?’ I am not judging their condition, but rather taking a thought to my own life that after all the years I have invested in my career or business I will not grow up and lack the basic things of life (Housing, clothing and food) at the least.

Retirement is one of the topic we least talk about in business and work circle, but it is a reality we will all have to face someday soon. Every time you hear the word “Happy Birthday”, one of the things coded in it is the fact that you are getting older, and with growing older moving an inch closer to retirement.

My Personal Finance Story

Hey, my name is Felix (pseudonym), I am in my mid-thirties and this is my personal finance story:

I was born into a humble family, where both parents were Civil servants.  Our family finances was up and down, but we never lacked basic needs like food, clothing and shelter at any point, and all the six children went to good school and at no time were we sent out of school for school fees, it was paid as at when due, how my parents pulled that off I do not know considering their salaries as at then.

Introducing a New section-' My Personal Finance Story'

My Personal Finance Story is a new section we would like to introduce for our reading/learning. 

It will be real life personal finance stories of people, the experiences, they have gathered over the years, we want to learn from people around us and see the practicality of personal finance and how we can learn from their mistakes, by avoiding the pitfalls and also leverage on their success story and make it ours.

We will be using pseudo names, locations etc. so the identity of the person telling his story is not compromised in any way. We will also use the medium to seek for financial advice as the case maybe (Note we will not post any request for funds).

You are free to send me your personal finance story at babat09@gmail.com, follow me on twitter @pistis03.

Lets do this together, lets learn from each other.

Ayorinde B.T

I am your friend and Personal Finance Coach Babatunde Ayorinde.

Living in This Trying Times

www.womenonthefence.com

Over the past few weeks I have had to advice and counsel a number people on personal finance issues relative to the financial turbulence within the Nigerian environment. I had to explain that it is not just a Nigerian thing, but worldwide as a result of Inflation rate been is on the high side and Cost of living which is also on the increase.

Let me refresh our memory: What is Inflation? This is an economical term defined as ‘The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.’ It is obvious that the inflation rate in Nigeria is in the state of comatose.

Let us quickly define the other concept: What is cost of Living? ‘Price of goods and services required for sustaining or maintain an average level of standard of living. This cost varies from place to place and from time to time.’

But I will relate more to the Nigeria environment. The inflation rate in Nigeria as at May 2015 9%, this is not the highest in the history of Nigeria as we had a record high rate of 47.56% in January 1996, however it is high at 9%, this figure is published by the National Bureau of Statistics, Nigeria (http://www.nigerianstat.gov.ng/).

Thrift or Mutual Contributory Financing-Adashe-Ajo-Esusu

www.wealthresult.com

Having talked about Targeted Savings in our last post (Here) I did talk about Ajo  as a method of targeted savings, and I got a chat from a blog visitor requesting that I do elaborate on it and therefore the need for the post.

 I must stress that the Thrift or Mutual Contributory Financing is not new to our system and it is found in all tribes in Nigeria, it is called Adashe in the North, Ajo by the Yoruba’s and Esusu in the East. The history of this method of financing dates back to the 16^th Century (Seibel 2003a) I had to do some research on it myself and its quite interesting to know that it is can also be founded in the Caribbean Island and other African countries. It is called ‘Susu’ in the Caribbean, this suggest to me that it was even earlier than we thought.

Enough with the history and let us talk about Adashe, Ajo or Esusu. I will like to categorise them into two:

Dynamics of Targeted-Savings

http://blog.equifax.com/

Now that we have extensively dealt with personal finance goals, there is need for us to go a step further and elaborate on the concept of targeted-Savings.  Targeted-savings is one of the best anchor of achieving personal finance goal without debt.

I will like to define Targeted-Savings from the two words that make it up: Target and Savings.

Target: To elect as an object of attention or attack a midst many options.

Savings: The money one has set or put aside, especially through a bank or other official scheme.

Putting the two together, Targeted-Savings is the saving meant for a particular purpose. It is easier to save with this method as the cost of what is to be done and the time line involved is known. (From our post on Personal Finance Goals, we discovered the three tiers of goals: Short- term personal finance goals, Mid-term personal finance goals and Long-term personal finance goals (Get it here)).

 I remembered while growing up, a few friends and I used this method to buy cloths and boots back in the days.

Setting Personal Finance Goals.

ibeeandthemoneytree.com

Since we have already discussed Budgeting and the likes, it is highly imperative that we talk about having personal Finance GOALS as this will be a driver in achieving a savings culture and realizing dreams.

So what are GOALS? Goals are object of a person’s ambition or effort; an aim or desired result. Hence, personal finance goals are those objectives and personal financial ambitions one is aiming to achieve within a desired time frame.

Personal Finance goals therefore can be divided into three parts based on the time frame set for the realization of the Goals. They include: Read more

Identifying (Differentiating) Needs and Wants

 doncooper.com

In the past weeks, I have had to explain to blog readers the concept of Needs and wants, as a result of been a key area were we can cut down on expenses so as to achieve a good savings habit.

Yes Saving Habit, savings is a concept that needs to be learnt and this concept will be extensively addressed in our next post. However, we may not have a full understanding till we have been able to separate and identify our needs from our wants.

Needs can be defined as must have, something you can't do without, they are essentials and without which daily activities can be challenging. While Want are non-essential expenses but make our life more pleasurable, enjoyable and adds comfort to our existence, but we can live without them. Allow me to categorize our Basic Needs into the following headings which are:

1)    Housing, this should not be tacky, but decent and nice.

2)    Food, I recommended a good healthy meal

3)    Clothing, having appropriate cloths for all occasions.

4)    Basic toiletries.

5)    Means of Mobility

Dynamics of Budgeting (Part 2)

From our last post on Dynamics of Budgeting Part 1, we were able to lay the foundation into budgeting for recap, please check  (Here), we will be moving a step ahead, and I will love that we go a bit practical with either a notepad and pen for you do the write up with your electronic gadgets.

www.greater.com.au

I) Now let us identify all your source of income:

v  Monthly Salary.

v  Sales Profit.

v  Monthly Upkeep from big brother and sisters.

v  Other income.

II) Pen down all Expenses

 Fixed Expenses (This are necessary expenses that stay unchanged from month to month)

v  Tithe.

v  Rent .

v  Transport .

v  Call cards (Phone Bills) ** prepaid customers with defined credit limit.

v  Monthly Toiletries.

v  Cable TV subscriptions.

v  Etc.

Dynamics of Budgeting (Part 1)

www.tomstinrealty.com

As an individual, family or corporate organization, we have had to do a form of budgeting either once or twice.

 What then is the term BUDGETING? Budgeting is an estimate of income and expenditures for a period of time. Budget is futuristic; it is a workable plan of all income and expenditure for a specified future period. To have a good understanding of wealth and equally be wealthy, budgeting plays a crucial role. The formula for Wealth is:

                    Wealth= Time + Money.  

We must understand that to be financially independent our passive income must be greater than our expenses.

Reasons why you need a personal Budget:

      1.   It is easier to become wealthy and be financially free with a personal budget: Personal Budget will open your consciousness to where your money goes every month, the truth is most of us know we spend money but do not have a grip on what and what we spend on and before we know it we are broke and indebted in the process, eagerly waiting for the next pay check/salary as the case may be.

         2. It is easier to stay out of debt: With the aid of a Personal Budget you will avoid the regular pitfall of recurring debt traps.

    3. It is easier to get out of debt faster: Personal Budget brings your debt to your face and makes them a priority to be cleared, unlike when you do not have them written down. Sometimes we genuinely forget we owe some money, other times we pretend to forget *wink*

 4.  It helps us save, especially targeted savings: Personal Budget will help you develop a saving culture especially targeted savings like buying or building a house, buying a car, getting a degree or any other capital projects.

        5  It helps with overcoming bad spending habits: Personal Budgeting will save you from bad spending habits, as it will starve the cravings with little or no allocation of funds to nourish such

      6. It helps you understand your ‘Financial self’ better: With Personal Budget you will know your true Financial Self in terms of your position or standings financially.

7.    It helps you achieve your personal financial goals: Financial goals are key drivers of Personal Budget, hence with a functional budget in place, achieving your financial goal is on track.

LBI—Living Below Your Income.

Sequel to our former post, we have been able to establish that LBI is the most appropriate. This is due to the fact that they live within a strict budget; they have a firm financially disciplined life style, they have an organized finances and build up savings by putting aside an amount consistently on a monthly or daily basis, also, they even have wise investment via making extra income on the side line, this is a sure way to being wealthy.

Wealth is built through a disciplined life, I must emphasize that this will not be an easy ride but with consistency, it will become a way of life. You must work with a balanced and tested budget as some budgets are not workable. Have in your budget funds allocated to charity and never spend beyond it in a month and in case you have to go beyond it (in extreme cases) you are having it as an advance from the next month’s quota for Charity (we will discuss budgeting soon). For so many people the major problem is learning to say ‘NO’ and this is key to Living Below your Income, most people I have discussed with say the same thing that is ‘They cannot turn people down’, and what I say is you must be able to say NO especially after exceeding the charity budget for the month.

LAI—LIVING ABOVE YOUR INCOME/ LWI—LIVING WITHIN YOUR INCOME

www.workmobility.eu

Over the past week, I have had to answer a lot of questions from blog visitors about the three categories that I talked about in my last post, if you miss it you can get it here. I will take out time to explain in details about the three categories, starting from the LAI—Living above your Income, I must stress at this juncture that to have a grasp of our financial life,  we must be ready to take responsibility of our spending habits. Worthy of note is the fact that  we all are looking for financial liberty, freedom and stability.  Also, it is not only low income earners that need financial literacy, even the rich who have poor fund management skills do.