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Did you know that 48% of Nigerians tend to slip into depression the moment they begin to run low on funds? It sounds funny, but I bet that many of us can relate to this truth.
In this world of ours, money is a very vital asset. If one is to survive at all, money is needed to purchase the necessities needed for survival. But it is one thing to earn money, and another thing entirely to possess the necessary skills needed to maintain and manage one’s funds.
People tend to have financial issues for two reasons: 
- They don’t earn enough to meet their necessary needs.
- They earn enough money to meet their needs, but such funds are often poorly managed.
People in the second category seem to be in an even more miserable state. For them, money is not the issue because no matter how much they earn, it will never be enough due to poor money management.
What’s worse is that these individuals do not realize their problem is their inability to manage their finances. They believe that having more money will solve all their problems.
The Importance of Managing Your Finances
If finance management wasn’t an important tool that every person needs to learn, companies wouldn’t spend important time and money hiring finance managers who would handle the huge responsibility of managing their finances, monitoring cash inflow and outflow, and also inventing new ways to save or earn more money.
The measures suggested below are not all-exhaustive strategies but rather a few steps to get you moving in the direction of financial management.
1. Take a finance course or lesson
This article aims to give you a few practical tips on how to manage your finances, but it is not exhaustive. The world of finance is a very vast one with a lot of practical lessons to learn, imbibe, and properly manage your financial life. Many of these finance courses can be found online.
If you are a student, your course of study might include sourcing for and studying books on finance management. If you are a busy person who does not have much time in your schedule to pick out books and read, then video tutorials would be a pleasant substitute.
Regardless of the method you choose, ensure that you get a financial education. Taking the time to learn ensures that you will be applying well-proven strategies to your finances and not just random methods you heard of or ‘you think’ would work.
2. Have a budget
Anyone who knows a bit about finances will tell you one thing: Have a budget. A budget should consist of an estimate of your cash inflow and the amount of money you are estimated to spend that month on your needs and other necessities. Having this on paper helps you evaluate your spending, purchase decisions, and even your savings.
Seeing what you spend money on will help you identify and cut off unnecessary expenses while directing the extra money either toward the purchase of things with more value or to your savings.
Moreover, planning for your expenses helps you think more rationally, plan more wisely, and save more. A wise man once said, “a planned event will always come out at least a percentage better than an unplanned one.”
3. Set financial goals
People set academic, marital, and career goals, but very few set financial goals, whether long-term or short-term. A financial goal can take any of the following forms:
- A plan to purchase an item that costs a lot. For example, buy new furniture for your house. This will require you to save up for a few weeks or months.
- A plan to start saving towards your child’s future education. This might require you to set aside a certain amount of money, either weekly or monthly.
- A plan to cut down on your spending for the month or a few months by at least 15%. This would require you to purchase less and save more, etc.
4. Monitor your spending
Money is meant to be spent, but the important question is, What is it being spent on? Essentials such as housing and medical bills, car bills, etc. are some of the things we spend money on. Money properly spent should not be mourned over, but money poorly spent is a mistake that should not repeat itself again.
One way to know if you are spending wisely is by monitoring how and on what you spend your money. In other words, monitoring your expenses has no disadvantage. You can do this manually using pen and paper or seek help from technology; many financial applications can help you track your expenses.
The essence of financial management is that it keeps you motivated, disciplined, and focused on your financial growth. It changes your financial life and changes you from a person who just spends as the money comes to a person who patiently thinks through a financial decision before it is made. You are no longer just moving with the flow but instead following clearly mapped-out financial steps and strategies.
5. Create a priority list
Many of us have experienced the temptation of wanting to spend on our pleasures once we receive money. Indulging in this temptation too often can be very risky because we end up spending on unimportant things while the important ones remain unsettled and creep over into the next month’s bill.
The important things ought to come first, as they carry with them certain consequences. Important bills such as housing, schooling, or utility bills should be paid first, as this will help you avoid extra late fees. In other words, what carries the most weight should be prioritized.
6. Spot and reduce recurring charges
Examples of recurring charges are subscriptions to services that tend to renew by themselves. An example might be the cable subscription or a mobile data service plan you subscribed to.
The problem with recurring charges is that most of the time, we don’t make use of them, but whenever they’re due, money is deducted from your account. It might be a Showmax subscription you haven’t used in months or a mobile data plan you mistakenly subscribed to; whatever it is, identify and eliminate the non-useful ones.
7. Find an investment plan
Investments are one of the best ways to generate more money, not by saving, as most people erroneously assume. When you invest, you are putting your time, money, or resources into a venture that will profit you financially.
Often, when the word investment is mentioned, some of us tend to imagine men in dark suits and see it as something that only bankers can do, thereby ruling ourselves out. This assumption is very wrong, as anybody can invest.
Your investment plan must not begin with a million-dollar project; you can invest literally anything, including your spare time. For example, signing up for a driving app and investing spare hours in the evenings in this side gig. Investment opportunities, both big and small, are all around us. You just need to make the proper inquiries.
In Conclusion,
A major step towards securing your future is securing your finances. It is worrisome that many of us will readily engage in a conversation on how to earn more money, but very few have something to say when it comes to managing that money earned.
The money you earn with so much hard work will go down the drain if you do not follow up with proper management skills. While it is important to make money, it is also very important to learn how to save, invest, and properly spend money in a manner that will ensure long-term liquidity and growth.
Read also: How to Discuss Finances With Your Partner Before Marriage.
Finance is an important subject that needs to be discussed, especially when you are about to tie the knot. Read this article for more insight!
