MANAGING YOUR SALARY - RICHARD OKUNOLA

Hello Great People,

Welcome to back to my space! We will continue the discussion on how to manage your salary.

First, we need to identify the popular myths about managing your salary. The prominent of these myths are listed below:

1. Some people believe that they cannot save because their salary is low
2. Some people believe that their needs are too many and as a result they cannot save
3. Some people believe that they dont need to save since they will eventually spend the money

These myths were the shackles that held me from saving when I first started working. I had so many great stuffs in my mind, I wanted to look good, acquire many gadgets to make life easy, travel around the world, and build great business, but the salary never agreed with the vision,.... The sad truth is that I did not have enough money to do all the things I wanted, not to talk of trying to save out of my salary....

I am sure many of you reading this have also had similar experience. What eventually happens is that some people end up borrowing to meet their various needs, and in the process of borrowing, they no longer have control over their income/salary.

Without wasting much of our time, I will be explaining some tips learnt from my amazing mentors, as well as various literatures on how to manage your salary (whether big, average, or tiny) in such a way that you do not go broke before the month ends. To make this interesting, I will be combining my personal experience, readings from various books, as well as my mentors' words so that you can aggregate and deduce your conclusion from this content. Do enjoy the read. Kindly take not of each quotes.

Many people realize the need to prepare a financial plan but lack the discipline and willingness to prepare one - Adewale Ajayi

When I first started corporate work in 2017, I was earning below the minimum wage and a majority of my expenses consumed my salary to the extent that i ended up having nothing left to fall back on. Many times I had to call on a few friends to lend me money to survive especially when it is one week to the next salary. At first, I thought this was because I was not earning enough to sustain all my needs, and of which I thought was true. However, what I noticed was that, even after I got a rise in my salary by more than 5x my former pay, my expenses also rose significantly, and the pay was still looking like nothing has changed. My appetite changed, I no longer like the N5 pure water, I now prefer bottled water of N50. I now visit Chicken replublic instead of Iya saheed rice.... (Lolz), I have forgotten that my salary only increased by 5x, and I have unconsciously increased my spending by 10x, spending more to get the same thing I used to buy for a lesser amount. The more i try to save, the more impossible it seem to be. However, just like Brain tracy said in his book

“You can make excuses or you can make progress. You choose.”

Dont misunderstand me, it is good to enjoy your life and spend money, but it is also wise to save some for the rainy days.

Remember that it is what you save today, that will save you tomorrow.

After many months of struggling to make a living out of the salary, I discovered that I needed help because my salary get exhaused barely few weeks after it is paid. I was lucky to have a mentor (Wale Ajayi, a partner in KPMG), who gave me an eye-opener on money matters. He gave me the book titled, "Money Matters" which I read and was able to identify where my financial problem was coming from. It was simple, I spend more than I earn, and that automatically means I would have to borrow to meet my needs. I quickly thought about it and decided that this needs to change. Just like Robert Kiyosaki said in one of his books, "

If you want to be financially free, you need to become a different person than you are today and let go of whatever has held you back in the past."

Enough of the story, how can i manage my salary?

Yes, I heard you right.... So, the simple trick which worked for me over the years can be traced to the scriptural text "Train up a child in the way he should go: and when he is old, he will not depart from it- Proverbs 22:6". The scripture is self explanatory, once you are able to discipline yourself with the points below, you have broken the shackles forever....

Steps to managing your salary

1. One of the first step towards managing your salary is to gain mastery of financial discipline. What this mean is that you must have a budget for your monthly salary, or else, you end up not knowing how you spent your hard-earned money. Even big organisations that operates businesses always have budgets, how much more you. Do a small analysis, identify how much you actually earn.
2. Whether your salary is huge enough to feed the entire community, or so small to hardly feed a person for three-square meal, your monthly expenses should not exceed 70% of your salary. You must arrange your total expenses in such a way that your house rent, utility bill, feeding, transportation, tithe, and other relevant expenses do not exceed a total of 70% of your salary. If you spend more than the 70% threshold, then you are more likely to spend the entire 100% before the month ends. To reduce your expenses, you need to develop a scale of preference and filter out unnecesary items
3. You must develop the habit of saving at least 10-20% of your salary for specific or capital projects. The project can include professioal exams, academics, building, vehicle, wedding and the likes. The project must be measurable and a target must be set towards achieving the project. While this is good, also ensure that the project you are saving towards is not just something that will vanish in a day. It must be a project that you will always remember for the rest of your life, If you achieve your target, you will feel a huge relief and more responsible towards your success. I have done this countless times and trust me, it is such a good feeling. In fact, that was simply how I managed to get my first car.
4. Take care of yourself with 10% of your salary. This cannot be better said. You have worked so hard for the month, you also deserve to be taken care of. Take 10% of your salary to get that designer cloth, bag, shoe and items you have been longing to have. But take note, if the 10% cannot buy it in a particular month, keep the money and add it up to the following month until you are able to afford it. But if you still cannot afford it, then you need to cut your coat according to your size. It simply means you are living beyond your means. Learn to manage your resources and spend only within the budget.
5. You must separate your needs from your wants. According to Economists, human wants are insatiable and as such, it is important to draw a scale of preference on the things you really need, thus separating your needs from your wants, and priotizing the important things.
6. Finally, to become financially independent you must turn part of your income into capital; turn capital into enterprise; enterprise into profit; turn profit into investment; and turn investment into financial independence."—Jim Rohn. What this simply means is that do not just sit down and rely on salary alone. You must develop capacity for multiple streams of income.

All being said, you should note that it is only when you are young and full of vigour that you have all the energy to work, by the time you are old, your responsibility keeps increasing and you have very little to fall back on. It is at that time that you will undertsand the saying "It is what you save today, that will save you tomorrow". It is therfore important for you to develop a saving habit and ensure that you stick to the saving plan even in the face of temptation.

A piece of advise, do not lend anyone part of your target savings. You saved it for a purpose, do not let anyone ruin your plan. You should also lock it out from reach.

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In conclusion, managing your salary is much more about doing the best with what you have and not about achieving a certain level of income. If many others have been able to achieve, I believe you can too!

Thank you for reading to the end.

Your brother!

Richard Okunola