Taking control of your personal finances means more than just ensuring your future financial security, as it also means regaining your autonomy in financial matters, JOSEPHINE OGUNDEJI writes
Funke Oladele, a 29-year-old single lady living in Lagos, works as a customer service representative in a telecommunications company and earns a monthly salary of N120,000.
Despite her relatively low income, Oladele is responsible for supporting her elderly mother and younger siblings.
Her family lives in a small rented apartment in a low-income area of Lagos, which costs her N250,000 yearly. She spends an additional N20,000 on transportation, N30,000 on food and other household expenses, and N10,000 on her mother’s medical bills.
To make ends meet, Oladele has taken out multiple loans from friends and family, as well as a microfinance bank to manage her expenses. However, she now faces the challenge of repaying the loans at a high monthly interest rate of 10 per cent, which amounts to N50,000 per month. This repayment amount is more than half of her salary and puts a strain on her financial situation.
Despite her best efforts, the customer representative is unable to save any money and is constantly stressed about her finances. She worries about her family’s future and feels like she is trapped in a cycle of debt and financial instability. The high cost of living in Lagos, combined with her family’s financial needs and her own debt, make it difficult for her to find any relief.
Financial stress can be a significant source of anxiety and worry for many women. Whether it is about debt, saving for retirement, or meeting daily expenses, managing finances can be challenging without proper structure.
There are lots of benefits attached to taking control of your financial decisions. By creating a budget and monitoring your spending habits, you have the power to plan for your future and make sure you have the means to achieve your dreams and aspirations. Education funds will allow you to take care of your children’s school fees when they are of age. Health insurance will help you manage huge medical bills. Regular investing in stocks or other asset classes provides an additional layer of security and potential profits, which can improve the long-term financial outlook.
Taking charge of personal finances is more than just securing your future but reclaiming your financial independence. With a carefully crafted strategy and consistent effort, you can take control of your financial lives and create wealth on your terms.
According to Money Africa, there are several steps people can take to mitigate financial stress and improve their financial well-being. Here are some of them:
Create a budget: Creating a budget is a crucial first step in managing finances. It helps you understand where your money is going and identify areas where you can cut back. Start by tracking your spending for a few weeks or a month, and then use that information to create a realistic budget that takes into account your income, expenses and financial goals.
Build an emergency fund: Having an emergency fund can provide a safety net and help alleviate financial stress. Aim to save at least three to six months’ worth of living expenses in a separate savings account that you can access in case of unexpected expenses or job loss.
Address debt: Debt can be a significant source of financial stress for many women. As a general rule, financial experts recommend that debt repayment should not exceed 20 to 30 per cent of one’s monthly income. You should avoid debt altogether if you lack stable income, lack financial discipline, struggle with impulsive buying, or the interest on the debt is high.
Invest in retirement: Women face unique challenges when it comes to saving for retirement, including the gender pay gap and time out of the workforce for caregiving responsibilities. However, it is essential to start saving for retirement as early as possible to ensure long-term financial security. Take advantage of individual-crafted plans which you can commit to doing every month. You can reach out to our financial advisors to help with this.
Seek financial education: Financial literacy can help women make informed decisions about their finances and reduce financial stress. Consider attending financial planning workshops, reading personal finance books, or joining a community to improve your financial knowledge.
Practice self-care: Financial stress can take a toll on mental health and well-being. It’s essential to practice self-care by engaging in activities that reduce stress such as exercise, meditation, or spending time with loved ones.
Hence, managing finances is an ongoing process, so it is essential to revisit your financial plan regularly and make adjustments as needed.
Financial struggles
Lamenting on the financial challenges faced over time, a digital marketer, Mary Famuwagun, noted that her inability to save contributed to her financial struggles.
She said, “Stemming from my inability to save as intended and my lack of investment. I’m thrifty and do not spend above my means, however, the economic situation of the country has been unkind to even the frugal ones. It is difficult not to spend as even the daily needs cost above the means of the common man, hence this demand for a saving culture.
“However, I have learned to save from a young age, it has however become straining and stressful these days. For me, my account balance could be low but I find relief knowing that I have savings somewhere for my rainy day, what happens when it becomes difficult to save? This is my financial stress; it has become a hassle to save your bits. “Famuwagun also highlights the issue of limited investment options for small-scale investors, who face challenges in investing due to their lack of knowledge and fear of fraud, which ultimately hinders their ability to invest small amounts of money.
She says, “There is the issue of investment because there are not a lot of reliable means for small investments. Investment is wisdom 101 for finance however, there’s either not having enough knowledge to go about the right investment or the fear that your money could fall into dubious hands.
“I have however been able to mitigate these stresses by saving regardless even if it’s in the smallest amounts. The presence of digital saving and investment platforms such as Piggy Vest has been a lifesaver. These trusted platforms have served as reliable means for my savings and investment.”
Multiple sources of income
Meanwhile, an accountant, Leke Olushuyi, noted that there was no universal solution to preventing or alleviating financial stress as circumstances vary.
He, however, advises that a general principle to follow is to ensure that one’s expenses do not surpass their earnings.
He says, “Trying to control one’s expenses is good but in a period of increase in transport costs and house rents, it may be difficult to control such costs. At the end of the day, the most effective way to mitigate financial stress is to earn more than one spends. For some, this may mean having more than one job, for others, it may mean having a side hustle or trying to get a better-paying job.
“Individuals should monitor how they spend, cancel unnecessary subscriptions, reduce outings and events, and try to go for cheaper alternatives when they spend. Also, a savings scheme will always be a succour in times of need.”
Also, a legal practitioner, Funmi Ajetumobi, advises that having an additional source of income while living within your means is a good way to achieve financial stability.
She says, “By having multiple sources of income, you increase your overall earning potential, which can provide a buffer against unexpected expenses or changes in your financial situation. In addition, it’s important to live within your means and avoid splurging when you don’t have extra money. This involves creating a budget and sticking to it, prioritising your expenses, and avoiding unnecessary purchases. By being mindful of your spending habits, you can ensure that you have enough money to cover your essential expenses while also saving for the future.
“Overall, the key to financial stability is to be proactive about your finances, always looking for ways to increase your income and reduce your expenses, and making smart choices about how you use your money. One solution I have is to have at least an extra source of income per time and live within my means, if I don’t see extra money, I don’t splurge.
“I have a budget for every month and I make sure to do that before income comes in. I am strict with my budget because I believe for no reason should I go into debt to survive. I already know how much I spend, like average monthly, so I keep that aside before I start spending on other things.”
Financial automation
A Tax Practitioner, Habeeb Olaosebikan, said the importance of financial management cannot be overemphasised. Hence, automating finances can be considered as one of the strategies to achieve this as it helps you to plan, control and organise your finances.
He says, “Automating finances can be said to be a technological approach to managing financial obligations. With this approach, a simple and timely satisfaction of financial goals can be guaranteed. For example, if I have to pay my house rent at the end of every December, I can spread the financial burden over a planned period of time by automating my finances for a regular stream of payments/savings. This can be routed through a bank, an employer, or a direct debit from a creditor.
“Conclusively, automating one’s finances is another intentional way to overcome financial indiscipline and financial stress.”
