How to Manage Your Money

 

Can money ever be enough?

Yes, No, Maybe

The truth is that everyone has a different definition of ‘enough.’ Some people are actively working toward financial stability, while others just hope things will improve.

Regardless of where you currently stand financially, learning how to manage your money is one of the most important life skills you can develop.

Money management is the process of planning, tracking, saving, spending, and investing your money wisely to achieve your financial goals. Good money management helps you avoid wasteful spending, reduce unnecessary debt, and build financial security over time.

Money management should be learned by everyone who wants to have a good grasp of their finances.

Let’s go through some tips or steps in managing our finances.

1.  Monitor your expenses: Before you can manage your money, you need to know how much you earn (income) and how much you spend (expenses). Once you understand this, you can begin managing your money more effectively. A way to track your income and expenses is simply noting them down, perhaps in your notepad. You can also employ the use of expense tracking apps available online. You input your income and expenses in it; every naira you earn and every naira you spend gets accounted for in the app. The app helps you organize them into sections (such as Home, Transport, Telephone, Social etc.). When you do this for about a month, you would have an approximation of your income and expenditure, which would help in your money management.

Through your monitoring, you can see the things that are draining your income and where your income is coming from (if you have more than one income source). You can then cut down on unnecessary indulgence draining your finances. For some, it might be regular eating out, for some, it might be the extra internet subscription you use for doom-scrolling. 

Many people believe they have a low-income problem when the real issue is that they don’t know where their money goes. If they track it, they will discover the expenses that add up over time.

2.  Have an allocation plan: After understanding your income and expenditure, you can allocate your income across different categories, with a budget. One of the common ways of budgeting is using the 50/30/20 method in which you spend 50% of your income on needs (rent, food, utilities etc.), 30% on wants (entertainment, eating out etc.) and 20% on savings (savings, emergency fund, investments). You can tweak the numbers; maybe 70/20/10 or 40/20/40 to suit your current financial situation.

While creating a budget, make sure to be as realistic as possible. Try to estimate a realistic amount, for instance, for your transport fare (if you don’t work from home) except you plan to walk several kilometers to work. You could also decide to take your budgeting to another level by creating subdivisions (e.g. rent and foodstuff are from needs) and allocating their subtotals.

Once your income comes in, try to save first. If you don’t, you will likely exhaust the money before you know it.

Read: 5 Budgeting Tips to Help You Manage Your Finances

3. Create an emergency fund: Unexpected events come up once in a while in form of illness, job loss etc. An emergency fund is the allocation of money that you have in place to take care of those important but unplanned expenses. The usual recommended amount for an emergency fund is 3 to 6 months’ worth of your monthly expenses. With an emergency fund, you can afford some peace of mind while trying to get another income source.

You can put your emergency fund in a high-yield savings account or low-risk investments that are easily liquidated like money market funds. In doing this, your money can work for you making a little more while being easily available to you when you need it.

4. Invest: Yes, invest, even if you can only start small. Start from where you are. Make sure to understand what you are investing in. Investment options include stocks, mutual funds, money market funds, real estate etc. For example, there are Nigerian and foreign stocks available for investment. They can be accessed through apps like Bamboo, Trove, Afrinvest, Piggyvest etc. Some people also invest in cryptocurrencies. You should however note that cryptocurrencies are volatile (it can give high reward and poses high risk).

Read: How to Buy Fidelity Bank Shares

5. Invest in yourself: Invest in your knowledge. Investing in your earning capacity is a very good investment. It pays off in long term. Learning a new skill increases your earning potential. Skills such as digital marketing, copywriting, data analysis etc. that are in demand can create additional streams of income. Also, invest in your health by taking time to rest and eating healthy food. A sick person can’t do more work or be capable of doing so much. Make sure to take care of your health as you grow your earning capacity by investing in books, courses, mentors and other forms of knowledge.

Read: How a 9-5 Can Grow Your Finances

6. Buy in bulk: Buying in bulk saves you some cash which adds up over time. It saves the time of going to the shop or to the market and money as bulk buys usually give you more bang for your buck. Of course, buying in bulk saves money when you buy what you actually need and can use before they expire.

7. Set financial goals: Having financial goals will keep you focused on where you want to be. Your goals should be specific; I want to earn “₦500, 000 per month” rather than “I want to earn more”. It should be time-bound. Giving yourself a timeline for your goal helps you to track your progress per time. It should also be measurable; there should be a way of measuring that the goal has been met.

8. Get more assets, instead of liabilities: While managing your money, in the hope of growing it, you should be playing the long term game, increasing your asset column. Buy assets when you can, instead of liabilities. A simple definition goes thus; Asset is anything that brings you money or appreciates in value while liability is anything that costs you money. For example, a property that you rent out generates income, while an expensive car is a liability as it requires some other expenses for maintenance and running.

9. Get insurance: Insurance can help you protect your finances and relieve huge burden in the situation of loss in form of accident, property or health.

10. Avoid Lifestyle Inflation: It is important to avoid lifestyle inflation as you start to earn more money. If you increase your expenses at the same rate as your income increases, it could be hard to have money for saving and investment. It is okay to enjoy the result of your hard work but remember to allocate a portion of that increase to your saving and investment before increasing your spending.

Read: 5 Ways to Deal with Impulse Buying in 2026

Managing your money is not about how much you earn but how wisely you use what you have at the moment. Whether you are a student, employee, or entrepreneur, good money management habits can help you achieve financial stability and reduce financial stress.

Start from where you are, use what you have, and keep improving your financial habits one step at a time. Small financial decisions made consistently over time often produce remarkable results.

ALWAYS DO YOUR OWN RESEARCH before investing your money. Take time to understand the investment platform or asset, the risks involved, and whether it aligns with your financial goals.