“It doesn’t matter if you earn N1,000,000 naira a month, if you spend N1,000,001 naira every month, in no way can you consider yourself a millionaire….” The reality is that I do not remember to whom those words are attributed, but what I have very clear is that it is one of the best financial advice that can be given to someone.

The idea is simple, don’t spend more than you earn, but in practice it is very easy for our personal finances to get out of control and even less so if we don’t have a detailed control of our expenses.

Living alone in Nigeria costs, between rent, groceries, fuelling, gas, water, internet, telephone, car, insurance, Netflix… oh God! so many expenses? And let’s not count those that we constantly spend but do not keep in mind: the Uber, the weekend flexing, the beers on Fridays, the monthly cost of DSTV or GoTV subscription that we spent months without interests…

In short, the point is that there are many expenses that we have month after month and that, between different debiting on our pockets are gradually emptied without us noticing. But, how to do so that this does not get out of hand?

I’m not sure I have the secret formula, but in my experience, making a simple prompt table where we keep a personal monthly budget has worked wonders for me. The objective of this document is that at the end of the year we are aware of all our expenses, income and how much money we would have left over at the end of each month.

The idea is simple. The personal budget is divided into 5 sections:

Household expenses: you must add the cost of the monthly rent or mortgage, water, electricity, gas, internet, groceries, schools, etc.

Savings and investments: here we will put our monthly savings, no matter if they are in a bank account, under the mattress or in long-term retirement plans. 

Personal expenses: once the needs of the home and savings are covered, we can begin to consider the expenses that we commonly need to have month by month. Here we can include expenses such as the monthly payment and gasoline for the car, the cell phone, some fixed services such as Netflix or Cable subscription, the monthly cost of the MasterCard (there are some expenses such as car insurance that we pay once a year but it is advisable to consider the equivalent of the monthly cost in this budget).

Additional expenses: here we can put all those expenses that we do not traditionally have in mind or do not keep track of. For example, how many times do we go to the movies a month (with their respective popcorn)? or how much do we spend on friday outings with wings and beers? 

Income: here we can add all our income. The net salary that falls in our accounts month by month, income that we have for a business or income that we normally receive.

Note: these points are in that order for a purpose. First we save and then we spend what we have left, but never the other way around!

Although it is in point four (additional expenses) where things get interesting, since it is these ant expenses that usually end up depleting us fortnight earlier than expected.

For example: I live in Lagos but my family lives in Akure. In my monthly budget, I consider each month a ticket, either by plane or by bus, round trip, to visit them, but additionally, I also consider some specific transport costs. 

Ok, many people tell me that what an exaggeration! but the reality is that, exaggerated or not, they are things that I am going to spend and if I do not consider these trips in my personal finances, one day I will see the balance of my account is left with little or nothing, and I will only It will be left to cry (or laugh… or cry laughing).

The important thing is that we are aware of everything we spend and how much they represent of our real income. If after spending what is necessary at home, saving and in our personal expenses, now yes, the rest we will have more confidence that we can spend on that trip to the movies or on those new shoes that we liked. But if the result of income minus expenses is negative, we will know a little easier where to start cutting expenses.