The Alaroro

a.k.a Budget a.k.a dashboard of how broke rich you really are

Guess what you and I are going to talk about today? MONEY. Yes. Money.

I have learned a few things about money in the last year and here I am sharing them with you. I think I jumped the gun with my Emergency Fund post and I should have started from here.

For those who know, my money plan used to look like this:

Single Source of Income – 100%

• 10% – Tithe
• 20% – Household Expenses x Feeding
• 10% – Giving
• 20% – Investment
• 20% – Recurring Expenses – Offerings, Internet, Date Night, Airtime,
• 10% – Turn Up money
• 10% – Savings

My income was slashed by half recently due to an unforeseen expense. *sigh* When this happened, my money plan looked something like this:

• 50% – Debt Repayment (Long story!)
• 50% – WTF am I supposed to do now?

So, the question is: How am I surviving? Here are a few tips that have helped me re-align my money plan since the beginning of the year.

1. Know yourself. You. Your habits. Recurrent expenses. Responsibilities. Desires. Seriously. You need to know yourself. How? Forget the old. Forget it, now. The old money is gone. Focus on what you have now. No Had I Knowns.
2. Write it all down
   • Debts
   • Yearly Expenses
     • Rent/Mortgage
     • Renewal of documents/Licenses
     • School Fees
     • Professional Membership Fees… etc
   • Monthly Expenses
     • Internet Subscription
     • Transportation (Uber)
   • Weekly/Daily Expenses
     • Fuel
     • Food
     • Airtime
     • Laundry
     • Self-care/Grooming
   • Expenses that don’t have head or tail
     • Car related expenses – (Currently, this means shoe expenses for me)
3. How many streams of income do you have? How much per stream? What are you worth? Where? If it’s zero, that’s okay. Everyone starts somewhere. If it’s 1million, all well and good. 1,000, das alright! Outline all your available monies here:
   • Savings
   • Investments
   • Stock
   • Kolo/PiggyBank
4. Can your number 3 cover your number 2? If not –
   • Do you need to cut down on your expenses or earn more?
   • Which one is achievable at the moment? Side hustle or minimalism? There is a sense of independence that comes with having your own money or getting paid for something you know how to do. We’ll talk about this some other time, let’s focus on what we have now.

Now, you have written down the facts. Let’s put it to work

What should your money plan look like?

If your income is monthly/weekly or as-the-deal-clicks, it does not matter. We still need to plan. Why do we need the plan? Because you need to know where your money is going. There are a few money planning recommendations I like (I always work with percentages)

1. The Angelina Jolie Way – Save 1/3, Live on 1/3 and give 1/3.
2. The Must Save Way
   • Living Expenses – 70%;
   • Long Term Goals – 20%;
   • Short Term Goals 10%
3. This one works too
   • Tithe – 10%;
   • Invest – 20%;
   • Living Expenses – 50% (Rent is accounted for here. If you pay your rent annually, save this in a separate account)
   • Do what you want – 20%
4. Every Naira Has Work Money Plan
5. Save 50%; Live on 50%

• Don’t be like me. Your debt repayment should not swallow up your income like that. I was so caught up in the moment, signing post-dated cheques and It didn’t hit me till I got home. I cried eh! Like a baby.
• You need a template for your budget? Check here

On the next edition of the Money Series, we will talk about how to stick to the money plan you decide to build.

Homework

Carry out all the steps and choose a money plan that works for you – It is pay season, so you can make the most of this. Share in the comments section which of the Money Plans you can use based on your Income now.

Disclaimer: All these ideas, thoughts are from my head – books I have read, life experiences, amebo work… Yes, I work in a bank, but I am not a Professional Accountant, Money Manager or worevs. For professional advice, contact a professional. I am just sharing the things that have worked for me and others that I know in the past.

Did you say “God forbid” when you read emergency? I’m with you on that, fellow forbidding person.

Let us ask Merriam-Webster a few questions.

What is an Emergency?

an unforeseen combination of circumstances or the resulting state that calls for immediate action

What is a fund?

an amount of money that is used for a special purpose

What then is an Emergency Fund?

An Emergency Fund is an amount of money that is used for any unforeseen combination of circumstances or the resulting state that calls for immediate action.

2 + 2 = 4

Simply put, an emergency fund is money set aside in case of “incasity”. Incasities happen.

• Job loss.
• Business wahala.
• Major medical emergency (Not just the individual – A partner, child, parent).
• Loss of a partner, parent or benefactorWarning: Scripture Ahead

Why do you need an Emergency Fund?

• To cushion any fall.
• Ain’t about to be servanting to nobody! Pr.22:7 – The rich rule over the poor, and the borrower is servant to the lender.
• It is a good place to start building your wealth.
• My mama ain’t raise no fool – Proverbs 21: 20 – There is treasure to be desired and oil in the dwelling of the wise; but a foolish man spendeth it up.
• What you gon’ do when the oil runs out?

N.B – You are not building this emergency fund to put your trust in, your trust ultimately remains in God. This God gives seed to the sower and bread to the eater – I like to be both. I sow and I eat. It all comes from him. I also enjoy being a good steward of what I get.

Proverbs 6:8 – Prepares her food in the summer, And gathers her provision in the harvest.

Some people might quote Psalm 127:1 that says “Except the LORD build the house, they labour in vain that build it” – guess what? We are building this with the Lord. It does not stop our covenant of tithing or giving or sowing.

How to build an emergency fund

Answer these questions:

As an ant, if winter shows up today? How much food should I have to survive it?

OR

If I were jobless/out of a business today, how long will it take me to get another job/build another business? How much do I need to survive in this period?

While you answer this question

• Open a separate account.

Call this account: Don’t touch it. All the money goes here.

• Automate It.

This is best. No, seriously. Talk to your bank about setting up a direct debit on your account into another account.

• Let it go

As long as money leaves your spending account into your Emergency Fund account? Let it go. Do you have money? Nope. The Emergency Fund only exists when it is time to fund it or during emergencies.

• Know your cap.

Don’t turn this into a regular savings account o. No o. You know “saving for a holiday” or “End of the year turn up savings”. No, this is the wrong place. Set a cap for this account based on your lifestyle. Your Emergency Fund can be N1,000,000 because of your answer to the ant in winter question.  (by the way, N1,000,000 is a scam. Remove one naira and one is no longer a millionaire. *sigh*)

• Start.

My advice to you today is simple: Start. Start small. Start big. Can you move your entire bonus into your emergency fund? All you have is 1k? I can only afford to save 5% of my income? Just start.

One day, you might need that money to rebuild your life. To get back on track…

Take it from someone who has experienced emergencies in her life – You need this fund.

ExtraTip: You can put your emergency fund in a low-risk mutual fund with an Asset Management company that gives you instant (max: 48-hours) access to it. Let it grow.