One of the things Victor had mentioned during her consultation with him was that she needed to diversify her income. “Use what you have to get what you need,” Victor had said. “Why are you looking for other business opportunities when you are already good at teaching? You can charge per hour or charge a flat rate.”
He had sent her a link with a guide on starting a small business, and now she was busy writing her business plan, creating a work calendar, and discovering ways she could begin this business with as little hassle as possible.
She was currently negotiating her fee with a parent she had known for years. Another parent was interested in her services until she found out that her starting fee was ₦55,000 monthly. Layo was not disappointed. She had accepted that not every parent would be able to afford her services.
She was mindlessly cleaning the kitchen when an idea came to her mind. What if she could get her colleagues valuable information on managing their finances and diversifying their income? What if some of them could use that information to turn their lives around?
Kosiso stared at the lists she had produced from the information session. It was obvious that she was not doing well. For starters, she spent more on her wants than her needs, and her income could barely take care of half of her needs.
Freelancing for foreign clients earned her roughly $2,300 monthly, and with the exchange rate in her favour, she earned well over a million naira. Still, she couldn’t afford her current lifestyle. With Kene’s school charging millions of naira, her frequent trips abroad, and her frequent buying, it was impossible to rely on her earnings.
Ayo had taken care of everything, and she had never had to worry about being in lack or paying a bill. She had been too ashamed to contribute to the conversation at the information session with Victor and the other women. She earned the most; how could she reveal that her income could barely cover her needs? When no one was looking, she had snuck out of the room. I need to make more money, she thought.
Victor had said something about diversifying income.“If there isn’t a balance on your list, that is, your income barely even covers your needs, it may mean two things: one, you need to review if the need is really a need or, two, you need to diversify your income to match up to your income.
And I think that’s what a lot of you came to learn today, how can you make more money? To this, I’ll say, it depends on your financial goal. “So what is your financial goal? You can’t work towards what you can’t see. So, at the back of that sheet, I want you to write your financial goal. It doesn’t have to be complicated, but it has to be realistic and meaningful to you.” Kosiso turned the sheet.
She still hadn’t written anything yet, and she knew why. She was afraid to write down her goal because she would have to confront some things about herself. As much as she wanted to be free from Ayo, she still had nightmares about her poverty-plagued childhood. Kosiso wanted to be taken care of; she couldn’t trust herself to take care of herself. She couldn’t trust herself to protect her child from poverty.
Reflections
The 50-30-20 Rule
What is the 50-30-20 Rule?
The 50-30-20 rule is a budget rule that requires expenses to be grouped into three main categories: namely, needs, wants and savings.
What is the difference between the three concepts?
Needs are expenses that you must keep in your budget no matter what. These are the things you must have for a satisfactory life. This also refers to things that will put you under pressure if you don’t have them, such as food, clothing, groceries, transportation and so much more.
Wants are expenses that you choose to spend on, but which you do not need to live your life. A want is a desire, a wish or an aspiration. These are your ‘wanna haves’ such as
vacations, subscriptions, memberships and so much more. Sometimes, it’s tricky to distinguish between a need and a want. If you can live without it, then it is definitely a want.
Savings is income not spent, or deferred consumption.
It refers to the money you allocate for your future use or obligations. There is a saying that “Saving today will save you tomorrow.”Want to save more? Then be sure to set aside some
funds from your wants as extra savings. Now that you know, will you be willing to save more?
Let’s use an illustration to drive home the point: Steve earns ₦100,000 per month and he adopted the 50- 30-20 rule in budgeting his personal finances. This means he allocates ₦50,000 towards his needs, ₦30,000 for his wants and ₦20,000 for savings/investments.
What are the benefits of the 50-30-20 rule? For people who don’t like detailed budgeting, the 50/30/20 rule budget is an easy-to-use approach for keeping your finances in check. With only three major categories to track, you don’t have to dig into the basics as much as you would with a normal budget.
Also, the 50-30-20 rule reduces the amount of time you have to spend detailing your finances.
