Last
year, I read "The Smart Money Woman" by Arese Ugwu. It was an
entertaining and educational read. I picked several financial wisdom
nuggets from that book and added to the ones I had already learned over
the years.
File photo (Image: Dreamstime.com)
Today’s post is close to my heart because I know many women
struggle when it comes to good money management practices (I myself was
awful at it for a good period of my life). I am not a financial
management expert; however, I want to share 3 money mistakes I’ve made
in the past that you’d do best to avoid.
Tracking ‘Zero’ Expenses
I was quite terrible at this. I had no account of the money I spent
– how much, to what product or service, when, why, etc. I operated
under a pseudo-safety net; assuming that since I considered myself a
modest spender, then I was probably always fine and anything I spent
money on was fine. This wasn’t always the case. For many months, I ended
up spending more than I expected I would – on items that were
unnecessary, and couldn’t account for several of the expenses.
An expense tracker is essential (you can do this the ol’ school way
by paper and pen or by using an excel spreadsheet or any mobile app
that can support this). Once you start tracking your expenses, you will
be able to properly assess how much money leaves your account daily,
what specific items/bills/luxuries/etc you spend it on, and most
importantly what your major cost drivers are (the things you end up
spending the most money).
If you keep up with this practice, it will be easy for you to
review this information at the end of each month, notice poor spending
habits / unnecessary purchases, and commit to better money choices in
future.
Balling on No Budget
Now this is funny. This is for us ‘high time choices’ that have
deluded ourselves into thinking that budgets are boring and restrictive,
and we can do “bad all by ourselves” without them. Oh no, Senoritas!
Budgets are an essential part of good financial management. It’s
necessary to setup a monthly budget that clearly outlines how much of
your income goes to bills and basic amenities, how much goes to your
savings account (in the event that an emergency, health or otherwise
occurs, and you need immediate cash support), how much goes to your
investment account (if you have one for stocks, property, or business
investment ventures), and how much you can afford to set aside for
“luxury” spending (dinners at fancy restaurants, Malaysian hair, etc).
Budgets help you create structure and organization when it comes to
money – helping you to prioritise “needs” first and then “wants” second.
Everyone benefits from keeping budgets. Whether your monthly income
is N40,000 or N40,000,000 — you need a budget (moreso if you’re one of
the “upper echelon” whose earnings make it much more tempting to spend
frivolously).
Stunting Like Your Richer Friends
I remember a time when I was broke. My monthly income barely
covered my bills and I was penny-pinching for dear life. Beforehand, I
had been a “stutter” – frequenting restaurants on a daily basis, clubs
every weekend (with their overpriced entrance fees and drinks ($10 for a
Long Island Iced Tea!), splurging on weaves, because you know I had to
have my hair “laid”, and buying items at random for the heck of it.
Of course, I kept all of this up with my bandwagon of “merry go
lucky” friends. However, things change when a bit of broke-ness sets in.
You begin to realize that many of those “friends” are only willing to
stick around when the drinks and dancing nights are plentiful. Many of
those “friends” are not willing to provide anchor and support when you
are drowning in financial debt – they might even assist you in plunging
further.
The good news is, I accepted this lesson swiftly. When I noticed my
pockets were becoming abysmal, I quickly changed my spending behavior. I
cut down restaurant trips to once a week (if that), removed club
outings completely (you’ll be surprised how much money you save if
you’re not buying new outfits each week or paying entrance fees or
buying drinks), and controlled my itch to buy unnecessary items because I
wanted them. The great news is that during this period I was able to
filter out the quality friends from the “merry go lucky gals” and still
found ways to have fun and enjoy myself while being money-cautious
(indoor dinner and movie nights with friends, free event outings around
town, etc).
If you’re currently stuck in “stutter” mode and feel there’s no
hope out of it, please know that it is in your best interest (peace of
mind, no debt) to free yourself of this form of bondage. If you’re
worried about losing those “richer” friends, the question you should ask
yourself is: are they really my friends if I feel the only way to keep
them is to lead myself into debt?
There you have it folks.
Any additional financial management tips you know that have worked wonders for you?
I’d love to know.
About the Author:
Adaeze Diana is a freelance writer, speaker, and vision coach who
helps young Christian women feeling depressed/hopeless discover who they
are and why they exist so that they can learn how to enjoy more
fulfilling and fruitful lives.
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