money management
Every penny counts
Tips for effective personal financial management
While people today have more money than they did generations ago, for a generation where early retirement has become more appealing than ever, one would think that the knowledge of effective money management would go in the same direction but that’s far from the being the case as time after time we have proven to have very limited knowledge of how to manage our hard earned money.
Taking control of our personal finance goes way beyond saving money, it also includes planned spending(budgeting), investing and debt management which when put together is called a financial plan. An effective financial plan is organic in that it needs to be reviewed and changed based on our circumstances, financial status, goals etc. An example would be the financial plan of a single person in school as against the financial plan of a married couple expecting their first child, it’s obvious that the plan of the former would include more of the discretionary expenses like clothing, entertainment etc. and committed expenses than fixed expenses . while the latter would include more of the committed and fixed expenses than the discretionary ones.
Budgeting
An important part of a financial plan is creating a budget which involves income and expenditure assessment. Our income are in the form of our weekly wages, monthly salaries, rental income from our properties, fixed interests on investments etc. Once we are done assessing our income the next step is to know how much we spend given our income. Keeping track of our expenditure seems restrictive as more people are now inclined to living in the moment as opposed to facing reality which more often than not catches up to us. For expenditure assessment, our expenses must be categorized into three, the discretionary expenses like buying new clothes, and general non-essential stuff, fixed expenses like our annual house rents etc. and committed expenses which captures our general utility bills. So now that we know how much money is coming in and from where and also how much is going out and to where, the next important step is to try and cut down our expenses starting from the non-essentials after which we now save and invest.
Savings and Investment
It’s a general rule of thumb to allocate a minimum of 20% of your net income to savings and investment though it is advisable to allocate more. Savings involves stashing away money into your emergency funds account, debt repayment and setting money aside for retirement.
As easy as being consistent and following our financial plan sounds, it does come with a degree of stress which thankfully technology has helped us to cope with. In Nigeria for example, platforms like Piggyvest, Cowrywise, and an upcoming platform Vault24 has provided avenues through which individuals can automate savings and investment whilst earning unbelievable returns as just saving money without making your money work for you tends to erode the value of the money saved especially now that Nigeria’s economy is as flaky as a grandma’s pie.
Other platforms like Revolut app have also tried to make money management as simple as having their app on your mobile phone and that’s where we come in, Everypenny, we believe every penny counts. Everypenny is a mobile app that aggregates your account balances and uses deep learning to spot patterns in your cash flow hence helping our customers better manage their funds.
We are trying to build a community of people interested in such a product which will be released in the first quarter of 2021 along with more features than I mentioned. So if you are out there and you are interested in such a platform feel free to comment about your expectations and probably feature preferences and with that I’d like to thank you for your time.
Adios.
