Salary provides a reasonable anchor for your financial freedom journey
When I saw the message that my first salary has been credited into my account, I was extremely happy. It was the kind of exceptional and satisfying feeling anyone who just started earning for the first time would have. Getting to this point has been a challenging one for me, with months of interviews, patient, and prayer. I was jumping in joy and planning earnestly how I was going to spend & and manage my fund wisely.
During my job hunting, I came across interesting books on personal finance and I also deemed it fit to follow some personal finance experts on social media. The likes of Arese Ugwu and Nancy Iloh were my muse. They have a way of breaking down everything you need to know about gaining financial freedom. I was determined to imbibe all that I have learned once I start earning.
How I learnt the Hard Way
I completed (NYSC) 2019 and during the course of my service, I was a spendthrift. I spent all my NYSC allowances on irrelevant things without any plan for the future. It got to a point that I plan what I will spend my allowance on before the money comes. I didn’t know the significance of saving. Even when I was posted to a private sector for my primary place of the assignment were, I was paid N15,000, I was still not able to save, the reason being that I have no basic idea of financial literacy. I spent all allowance on irrelevant things which I later regretted.
Some of my friends during the course of our service was able to save up 100-150 thousand naira. Some said they invested the money while others were able to start a small-scale business immediately we ended our service. I was really perplexed and ashamed when they told me their stories.
After that experience, I was forced to learn, unlearn, relearn. I told myself that I am going to take charge of my finances if I am opportune to get a job after my service. However, after a series of interviews, I was hired by a financial institution. I told myself that instead of making impulsive decisions and doing things that provide monetary satisfactions, I was going to strategise on how to make this new beginning worthwhile.
Here are the few things I did when I first received my first salary
1. I CREATED A BUDGET
Having learned the hard way, immediately I received my appointed letter, I sat down and calculated how I was going to be spending my Net Income henceforth. So, when my first salary came, I made it imperative to create a budget sheet with an exercise book, where I noted how I was going to spend my salary. And it was achievable with the help of everything I have learned from personal finance experts, which says don’t save what is left after spending rather, save before spending.
After creating a budget/goals that will aid me on managing my finances, I told myself that before I can achieve all that I have planned for, all I need is self-determination and discipline. Following the budget plan that I created, I was able to put aside funds for my savings and I decided to follow suite every month.
Simple illustration below:
My Net income was N150,000. I decided to open a Save For Me account with Zenith Bank, where I put aside N50,000 monthly. I have decided to make it consistent to remove N50,000 once I received my paycheque, to make it easy for me, I automated my account in such a way that I get instant debit once I received my salary.
2. I CREATED AN EMERGENCY FUND
Another way I spent my salary was by making sure I put aside funds for emergency purposes, reason being that life is unpredictable. This was also to help me not to dip my hands into my savings, since I had decided that once I start earning, I would try my possible best to put aside funds as this will enable me to cover for an unforeseen event.
Having read a lot about emergency funds and how helpful it can be, I made plans to set aside funds for unforeseen circumstances immediately my first salary comes. So, having removed N 50,000 for my savings, I decided to remove N20,000 for emergency funds.
3. PAYING MY PARENT
Another way I spent my first salary was by paying my parent. It was a way for me to show gratitude. I have always told myself that immediately I get my first salary, I was definitely going to structure it in a way that I can give them something every month. So, I fulfilled my aim by giving them N20, 000 to appreciate all they have done for me, promising them that more will still come in future. Watching their reaction made me so happy. And it made me feel that I have indeed come of age where I can give my parent something no matter how small.
4. CLEARED MY DEBT
Another way I spent my salary was by using part of the money to clear my debt, after I extravagantly spent all my NYSC allowance hoping that I will get a job immediately after my service.
You see, I had planned that I was going to go for my Masters immediately after service, and had started the process of getting my transcript from my school. The process cost me N 20,000. I sourced for fund everywhere but help didn’t come as everyone felt that I had saved enough during the course of my service.
I decided to go for a loan, to repay in a space of one month. Unfortunately, when it was time to repay, I was unable to and the interest kept mounting.
So, immediately my first salary came, I removed N30,000 from salary and cleared the debt. After that incident. And being debt-free never felt so good. It is the most rewarding and effective way to live a peaceful life. That was why I made it imperative to clear my debt immediately I received my first salary.
Assuming I didn’t do that, it will make me pay much more on my loan because the interest will keep mounting thereby reducing my ability to accumulate wealth.
5. I PAID MYSELF
Lastly, when my first salary came, I decided to pay myself. Though the desire to splurge was there, I had to be smart about it. Immediately I got my first paycheque, I had to remove N30,000 for my personal use. This budget will account for my clothing, fixing a new hair, transportation fee/ feeding & miscellaneous, since I already have a roof over my head.
In conclusion, Money management remains a major issue some people are facing, especially those just entering the labour market and are struggling with planning their finances. Once an inflow comes it will just take some 2 – 3 days to spend their paycheque and they are broke again as was my case during my NYSC.
But financially planning must be deliberate. And no one is responsible for it but yourself.
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