Human Hair? Designer Bags? Exotic Vacations? How Must You Spend Your Salary?
This is always an interesting lunch topic! What is the best way to spend one’s salary or income. Some will say YOLO- You only live once so you’ve got to live the life! Splurge! Show them! Bragado! Buga everybody! After all, you’ve earned it.
Another school of thought says ‘save for the rainy day, no one knows tomorrow’.
Mrsceonaija says, its all about BALANCE. Enjoy today, live life! But keep an eye open for the future too!
So how should one spend the income or salary? How much should go on vanity items? How much should go into investments? How much is too much for rent in the ‘crazy lagos’? There is no hard and fast rule but the below has worked for our family in the past decade so I am sharing. Let me know your thoughts or questions!
Investment & savings: Define what percentage of your total income you plan to invest. Generally, i do a 25-40% across different forms- paper assets such as shares/stock, treasury bills, landed properties, bank deposits, working capital into new and existing business e.t.c
Expenses: Ask your self the question- ‘ Do i need this?‘ If you don’t, then it is a want. There are some basic needs of man: Food, shelter/rent, clothing (note not designer clothing only :-)), private education in Nigeria where public education system is failing and some other unavoidable important costs peculiar to Nigeria. I know these expenses are high but the trick with expenses is that it rises to meet your needs and YOU need to put them in their place. 🙂 Who doesn’t love the luxury nice things of life! Least i forget, aso-ebi is not a need :-). it is a nice- to- have so be selective.
Donations/help: In our very communal country, no one person is responsible for just herself. It is important to lend a helping hand occasionally. There are genuine friends and family members to help and i do this. However, i typically assign a fixed percentage to this per month. Once this ‘pot’ is exhausted, then that is it for the month. Sometime, there are deviations to the norm but these are real exceptions. I recall one of my old associates asking for funds to do a little end of year party as he typically does it, was broke and wanted to maintain his O.B.O Status :-). Ofcourse i said no. Define what percentage of your income is assigned to giving/donations/helping others. At the end of the day, you cant love others more than yourself.
Tithe: Based on belief system
Cash is king: Have some buffer in the system. Things dont always go as planned 100%. Its life. At the end of the day, you need some cash in the system to meet daily obligations and surprises! Sadly, the days of trade by barter are over so you cant exchange your gold necklace for your childrens school fees.
Vacations: In our parents time, they hardly took international vacations! at least in Ibadan where i grew up 🙂 But i get it, the times have changed and we need to create instagram pictures lazing by the beach like Kim K. All i can say is be wise! Dont eat your seed! There are nice places to relax in Nigeria, then Africa. Don’t start with the Bahamas!:-). You can alternate things e.g do a local vacation this year, then an international/bloggers inspired one in the next year. You can pool with close family friends to share costs e.g nanny costs, car hire e.t.c. You can build loyalty with specific brand names e.g Hotels, gain travel points with airlines e.t.c to reduce your costs.
Attached is a personal budget template that can help to plan your personal finances. FAMILY BUDGET MRSCEONAIJA
So back to you! What do you think? How should the salary be spent?
Picture credit- haveagoodhairday & madamenoire