Ogbemudia Eddy Uwoghiren,
600 Level, Medicine and Surgery,
University of Benin,
Benin City.
Read Part I (Making Money) here.
Managing Money
Having made money, there is a need to manage it well and avoid running into debt.
As advised in the book ‘Richest Man in Babylon’ by George Clason, with whatever money comes into your hands, irrespective of how small, you must cultivate the habit of paying yourself first before spending anything out of it. A part of whatever you earn is yours to keep; never make the mistake of spending everything or even a little from it without budgeting and saving. Popular advice from the book is that individuals desirous of building wealth should save at least one-tenth of whatsoever comes into their hands, irrespective of how small the money is.
To effectively manage your money, you must take into cognizance, budgeting, savings and investments.
Consider savings like this: every morning, you buy ten eggs and store them in a basket. In the evening of every day, you take out nine eggs and leave one from the ten you put in in the morning. Over time, your basket will have an overflow of eggs because you put in one more egg than you take out daily.
One effective method I have used to develop a good culture of managing money is the 30:30:40 principle. Here, I pay myself 30% of every money that I make and store it as savings. Another 30% is reserved and saved up towards investments, and the remaining 40% goes into running cost and is spent.
In the same way we have made reading for exams a habit in medical school, we need to follow suit with saving. If we do this, we build great wealth for ourselves. FinTech apps like Piggyvest, Cowrywise and even Carbon (formerly One Finance) have made saving very easy these days, such that you can automate your savings to be done daily, weekly or as often as you want.
You should also consider saving your money in stable currencies like US Dollars. For example, 1,000 USD saved in January 2020 was valued at 380,000 Naira and as at July 2020, its value was 450,000 Naira; but 380,000 Naira (1000 USD) saved in January 2020 is now valued at 845 USD. All these happened within a space of five months. Now, imagine what will happen to the bulk of money saved in Naira for 5 years.
After paying yourself from the money earned—through savings—and removing the percentage you wish for building up investment funds, then, you can spend the remaining part of the money. Do not, however, spend sporadically. Consider budgeting before doing that. Most times, we blame our leaders for spending money recklessly and preparing outrageous budgets, forgetting that, as individuals, we too spend our money without sound budgeting.
A budget is a plan accounting for your income and expenditure with provision for an estimate on how much you spend or earn over a certain period. As an individual, I encourage you to have a principle—NO BUDGET, NO SPENDING. Budgeting will help you highlight your bad spending habits, ensure you spend only your money, make provisions for emergencies, stay organised and even meet your financial goals.
As you prepare your budget, ensure you make provision for debt payment (if you have any debt), plan with just the money you have, capture as much as you can, be realistic and never fail to have contingencies (plan for the miscellaneous).
Furthermore, a budget can be created weekly, monthly and even yearly—as often as there is a need to make plans for your money. There are many applications on the Play Store and App Store that can help with budget planning and tracking your expenses. Do make use of them, and you will enjoy your financial journey.
P. S.
Click here to watch our YouTube video with Dr Kiki Omeili | Doctor and Actress in Nollywood
Click here to watch our YouTube video on why you shouldn’t study Medicine at the University.
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