Cutting my Coat…2

This is the second half of the ‘Cutting my Coat…” post. Enjoy!

So these are the steps I took/ plan to take towards implementing my financial plan and meeting my savings target and other financial goals:

Assessing my financial position: I took the time the take stock of what I have, what my financial obligations are/will be in the near future and based on that determine what I could realistically put away at a minimum every month

Collecting part of my salary upfront and locking it in investment assets – I am allowed to collect a portion of my salary upfront, so I did that. I took the money and split them across various asset classes. The bulk of the money I placed in fixed income products and the rest went into equity. I ensured that the investments were such that I could not get the money without incurring a heavy penalty. So it would take a major emergency to get me to break the investment.

Saving before Consumption – I have a constant amount that goes into the various buckets of savings I highlighted in my Piggybank move post. Once I get paid, I immediately transfer the money into those accounts along with my tithe and other pledges/commitment. Open one or more saving accounts, which are for a specific financial goals and restrict your access to them (do not collect atms for those accounts or activate online access to those accounts if that is what it takes) so it would take a significant level of desperation to make you touch the money. I save first because if I try to save what is left after consuming, nothing would be left. There is always something to buy.  Tip: If you feel you don’t have the willpower to transfer the money, activate a direct debit from your income account.  In addition, if you feel you need stronger restrictions to prevent you from accessing the saved funds, you could always put them in fixed deposit product which penalise you for accessing the funds before the agreed time frame.

Budgeting and prioritizing my spending: Every month, I make a budget, which details exactly what I intend to spend (after deducting my savings) my money on each month, so my hair, transportation, food, recreation etc fall into that list and I allocate amounts to each line item. I even allocate some money to “waste” meaning do as you please.This helps me not to feel caged.  I try to stick to it. I prioritize my spending. Engage in VERY LIMITED impulsive buys, avoid random shopping sprees like a plague. I focus on needs, and prioritise wants, removing what is truly unnecessary. For instance, I would like an Iphone 6s but I do not need one enough to justify spending 250,000 on it given my income and financial goals. So in choosing a phone, I would look for a phone within my budget which would give true value for my money within the context of what I need from a phone. Budgeting does not mean being cheap. It means ensuring that you always get good value for your money.

Learning to tell myself NO: I am slowly learning to tell myself no and stick to it. I have realised that you don’t have to have everything you want and that you will not die if you don’t get everything you want. You will not die if you don’t change your phone every year, or change your car, or travel every holiday, or live on the island, or own a pair of louboutins, or buy Aunty Funmi hair, or buy asoebi for every wedding you attend or have a “fairytale” wedding. My brothers and sisters YOU WILL NOT DIE! Guess what? Life will continue! You know what would be shameful? when a genuine need comes up in your life and you cannot meet that need because you were to busy buying things you didn’t need. 

Planning ahead and saving with purpose : I took the time out to think about the major things I want to do in the next one to three years that would require a significant financial commitment and I have included them in my savings budget. In my opinion, this allows me comfortably finance important projects without resorting to major borrowing or any borrowing.  It is not when you are six months away from getting married that you will start thinking about to finance a wedding, or when your child is ready for school that you start figuring out how the school fees will be paid. If you want to go on vacation next year, you should have started planning for it now or even earlier depending on your income level and other commitments. I know that you cannot foresee everything but for those thing you can forsee, PLAN. I addressed saving with purpose here,

That’s it really. That is my plan, I am sure I will include more steps as I implement the plan and see the loopholes. What is your plan? Are you cutting your coat like me? Let me know in the comment box below.

Share and follow the blog for updates and remember “Don’t spend all your money trying to look rich, that is just hustling backwards”

Till next time.

Signed,

Chocoholiclady