John, 22, landed an entry-level role as a tax consultant the same month he completed his mandatory one year of national service in Lagos. The pay seemed good and has increased with each promotion he earned since joining the firm a year ago, but the problem is the young tax consultant’s finance are a mess; John is always in debt, and does not have any investment even though he is frugal.
John has many people living off him; his parents are retired civil servants and his sister is still in high school. This means he shoulders a lot of responsibilities and needs help to iron out his finance.
Millennials are people born between 1981 and 1996 while Post-millennials, or Gen-X, are people born after 1996.
Not every millennial or post-millennial can relate but there are a good number of young Nigerians, just starting out their career, whose household depend on their income.
Whether as a result of separated parents, parents’ retirement, job loss, or any other factor, several young folks have become breadwinners and for this category of people it is never easy planning for their future and fending for their dependents at the same time.
A few tips can help young people in this category plan their finance better and ease the stress they face.
Always work with a budget
It is always a good idea to have a picture of all your income and regular expenses in a month to be able to gauge how you spend.
In estimating your expenses you must take note of the needs of your dependents and not just yours so that your budget is accurate and you are not underestimating expenditure.
Start your budget planning by setting a minimum percentage that must be saved or invested no matter what. To achieve this, just assume your income was lower by that percentage and make an effort to make do with the remainder.
Typically some financial experts advise that 20 percent should be the minimum for saving or investing.
If you can also create room for unforeseen circumstances it would help you to absorb shocks such events might have on your finance.
Essentials first
Another thing to note when budgeting is to ensure all essentials go into the budget first.
To achieve this ensure you have to draw a scale of preference to check out how important items you plan to spend on are.
Get a list of what everyone needs in the month before you factor in what everyone wants; ordering what you plan to spend on in this manner would help you take care of critical needs without going into debt.
Get side hustles
Getting one or two side jobs could help reduce the burden on your bank account.
In selecting your side hustles make sure it is one that would not affect your current employment or your health.
It is usually better if the extra job is a hobby or something you already have the skills to do, this way it is less stressful for you.
Income from your side job should also be budgeted for, and you can choose to invest the profit from this revenue stream. Create separate accounts for saving
As a rule, you should not keep your savings in your main account if you have people living off you otherwise the incentive to be consistent would be lacking.
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Putting your saving in an account that you can lock for a certain period is a good way to ensure you never tamper with it. You must, however, create an emergency fund that can easily be tapped into when the needs arise.
Create income streams for your dependents
One of the best ways to ease the burden on yourself is by helping your dependents achieve financial independence.
You could enrol them in a skill acquisition class, professional course or program that could help them stand on their feet.
Another option might be to create an investment for them that would generate income, either in dividend payment or interest, to reduce reliance on you.
Another option might be setting up a business for them so they can earn money for themselves.
Have honest conversations about your finance
You must endeavour to be as honest as possible about your finance if the dependent is someone close to you (and mature enough to understand)
Sometimes you might feel frustrated at the demand dependents make of you because you cannot meet them.
The demands might not be based on needs but wants and the dependent seems inconsiderate of your wallet. But it might just be the case they genuinely believe you have enough resources to meet their essential need and fund their hobbies too.
It is necessary to be on the same page so together you and your dependent(s) can plan to maximize the resources you can afford.
Maximise transitionary income Transitionary income is income that is not regular; it could be a gift, bonus or from a one-off economic activity.
It is can be exciting to have extra money especially when you did not expect such, and humans are not always rational when emotional hence, you must plan how to judiciously use any additional income you make.
