Economics 101: Five tips on how to manage your income and achieve set goals

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Happy New Month, people! With the passing of June comes the end of the first half of the year and the second half has effectively kicked off. It is safe to assume that, at the start of the year, a lot of us made plans, both long and short term, on a set of things to achieve before the end of the year. And seeing that money is central to achieving almost anything in life, Bloomshire has come up with financial tips to help you manage your income in order to accomplish your set goals in the second half of the year.

Draw up a budget

This may sound simplistic, but it is very powerful and key to finance management. Make a list of all your needs and ensure that they fit in to your income. In listing your needs, do well to categorize them in order to separate basic needs like food, shelter and clothing from other supplementary needs that you can do without, before doing a cost analysis using your expected income (no optimism) as a peg.

Prioritize

One of the major benefits of drawing up a budget, as advised in the point above, is that it helps you to set an order of priority. Separating basic needs that are of utmost importance from other luxurious ones helps you channel your resources wisely.

It would be unwise for a student, for instance, to spend thousands of naira on a luxury item like an iPhone, when he/she does not have enough food items. While the former can be done without, the latter is of great importance as food is key to survival.

Discipline

Setting up a budget and sorting out priorities would amount to an exercise in futility without the financial discipline to stick to the plan. As much as possible, avoid impulsive spending and stick to the financial plan for the year/month/day.

Do not be pressured by external factors such as friends, new trends etc into spending outside your budget. There is no shame in saying “This is above my income, and I cannot afford it” to anyone offering you an item you didn’t plan for. Unless it is an emergency involving the life of a person, DO NOT spend outside your budget.

Track your expenses

Record keeping isn’t only meant for accountants, but every one that spends money. In being faithful to your budget, do well to keep records that would help you track your expenses and take stock of items.

This will help you to predict correctly, for instance, how much you spend on cooking gas and how long it lasts before needing a refill. That way, you would effectively prevent the emergency of running out of gas while cooking a meal, and having to draw out cash to refill.

Record keeping also helps you know which item gulps the most cash, and consider seeking alternatives that satisfy the same need but cost less.

Save

Save, save and save again. The whole point of all the aforementioned points is to help you manage your resources, take care of your essential needs and still have wands of cash left to save for the future. Saving helps you live a life free of debt, and it prevents you from falling into the category of millionaires who are just an illness away from penury.

Report by Adamson Falilat

Aba Festival, Igara