Money makes the world go around but earth scientists might disagree. Notwithstanding, money problems are part of what everyone experiences at some point in time.
Whether it is making more cash or spending wisely, money is such a big deal and rightly so. People, however, do not necessarily have to earn more to afford things they want.
Understanding typical money problems and knowing how to address them might save you from a headache when needs arise.
In a recently published article under a similar title, BusinessDay identified four problems confronting people: setting up a financial plan, paying (children’s) school fees, buying a car, and saving too little or nothing.
Although the money problems confronting people are not limited to the ones addressed in the article, the other set of problems discussed below are pertinent.
Planning a wedding
Wedding ceremonies have a sentimental value in the Nigerian society-as in almost every other part of the world.
In Nigeria however, the ceremony which lasts anything from a day to weeks, depending on the different types of white and traditional weddings, could cost up to N10million-N15 million.
Intending couples as a result often fuss a lot about balancing pocket economy with throwing the best wedding party in town.
Financial advisers often say couples looking to get married should not break the bank for a wedding. People carry unnecessary debt burden into their new families after borrowing huge sums for a wedding they couldn’t afford.
If you do not have enough to fund the wedding of your dream and your friends and family are not covering the shortfall, take time to draw a budget that would allow you make the most of what you have.
Sorry, but it is ill-advised to jeopardise your long-term financial status for short term benefits. You can go ahead with a wedding you can afford and throw a bigger one when your bank account becomes fat.
Settling debt
In handling a debt situation, it is important to understand the source of the debt; is it a result of an inability to manage your income or the debt was incurred due to some other reasons.
If you honestly think the debt situation could have been avoided if you had made proper use of your income then you should work on your budgeting skills so you avoid a reoccurrence.
To pay off the amount owed, you would need to draw a budget so you have an idea of your ability to meet your obligation. Also, in instances where the money is owed to several sources, you should try to settle the more expensive debts first i.e the ones with higher interest.
Where you don’t earn enough to offset the loan within the agreed-upon period, you could borrow from elsewhere at a lower rate to pay off the expensive debt. It would be akin to swapping for a cheaper debt.
Otherwise, cut down some of your monthly expenses, sell old stuff you no longer need, get a side job then pay more than the minimum amount agreed on to pay off the debt faster.
Paying for rent
In Nigeria jokes about tenants running from their landlords over non-payment of rent abound. Often the jokes are funny because many people can relate.
Since shelter is a basic need, people have to get a roof over their head- whether it is their own houses or a rented apartment.
Given Nigeria’s housing deficit estimated by the Presidency to be of about 20 million houses in late 2018, it is a safe bet that many Nigerian live in rented buildings.
While renting a place to stay is not a problem, many tenants do not plan ahead of time to pay their rental fees.
Unless you are living in an apartment that is beyond your means, setting aside 17 percent of your monthly income throughout a year covers your rent.
If you kept 20 percent of your monthly income you would have the money for rent in 10 months. The assumption is that the cost of your apartment can be footed with two months’ worth of income- the benchmark many experts advise.
You could also exploit products from Fintech companies that allow you to save in a lock-down account.
Planning for emergencies
One sure thing in life is that there would be events you never plan for. It might be an opportunity to benefit from something that springs at you or a need that arises when you least expect. One would need to be prepared for these uncertainties regardless.
Setting up an emergency fund is easier than you thought. All it requires is deciding an emergency-fund saving goal, for instance, some people try to save up the equivalent of three months of expenses which is different from their main savings.
You should endeavour to keep the emergency fund within reach so you can use it to solve problems in real-time.
If you are at risk of being confronted by much bigger uncertain events which might cost a lot, then you could consider taking up an insurance policy as a safe bet.
Starting a Small Business
Coming up with a viable business idea can be very exciting. You have discovered a way to make money while solving other people’s problems, but starting requires capital which you might not have.
In short, you need money to make money, and this a quite a problem! Common ways to pool money for your business are from friends and family and loans from banks.
But a creative way to solve this might be through crowdfunding which is simply raising small amounts of money from a large number of people typically via the Internet.
You should also explore options that allow getting capital in exchange for sharing ownership with the provider of the fund. Although this type of capital costs more than debt, this approach might require little or next to nothing from you in setting up the business.
At some point in our lives, we all plan to stop working and take long vacations to the Bahamas or somewhere as nice.
Planning one’s retirement goes beyond having a Retirement Savings Account.
To retire successfully the first step is to determine when you want to retire. Some of the factors that aid decided the appropriate timing include one’s health, financial status, terms of employment etc.
You must determine ahead what your financial need in retirement would be. For instance, some retirees would still be responsible for paying children’s school fees, rent and have dependents to cater for.
Once you have a fair idea, you must also take time to ascertain the sources of the income you can expect in retirement. It could be from Retirement Savings Account, earlier investment in stocks, bonds, real estate and other asset classes.
One could also decide what kind of activities to engage in during retirement to stay fit and also make some money in the process.
Retirees can choose to run a business, outsource their talents as consultants, freelancers etc.
