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David Adeleke: 5 Steps to Better Personal Finance Management

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Money is the greatest magician on the planet. It has mastered the art of appearing slowly and disappearing quickly. Most of the time, people say they have no idea where their money disappears to. I have been in such a situation before. At the beginning of the month (or at any other time), when the money comes in, life seems all well and good. However, I find that a few days later, the money has sneaked away, leaving no trace. I thought about this problem constantly. I tried budgeting, but to no avail. However, I finally found a way to get a grip on my finances and things have improved greatly in the past few months. My greater money management began from reading a book, and then, I followed some other steps. What worked for me is what I want to share with you. I am certain that it will work for you too if you are committed.

1. It was all inspired by one book: The Richest Man in Babylon.
I have come to learn in this life that the best advice is usually the simplest. Complex advice are harder to understand and implement but those are the ones people love to follow the most. Simple advice, on the other hand, is so easy to follow but also very deceptive. The simplicity is what turns people off. This is exactly what The Richest Man in Babylon is about. The personal finance management advice in the book is so easy to follow but also easy to dismiss as ‘unreal’. I was smart enough to study the book and make up my mind to follow the advice to the letter. This has been the turning point for me in my finances.

I recommend the book to you. The aim of sharing this as the first step is to help you understand that you will never be able to get a grip on your finances if you do not develop yourself to be able to. And the best way to develop oneself is to seek knowledge and practice it. A lot of us know things, but we do not live and practice what we know. So, basically, the first step to solid personal financial management is to build yourself by searching for knowledge and acting on it. That way, you will grow as a person and automatically you begin to produce ‘mature people’s’ results. As you must already know, no man can produce results beyond his own personal abilities. The more developed you are, the better the results you produce.

Ask yourself the following questions and answer them as honestly as possible. It’s best you get people who know you very well to help with this. The answers you produce for these questions will constitute the remaining steps of the process. So, in essence, the answers lie within you. You’ve just got to reach within and draw them out. Get a small notepad to help with this.

2. How much is your income?
Answering this question as accurately as possible will lay a solid foundation for the process of great personal finance management. Your income includes your salary or wages, monetary gifts, liquidated investment returns, etc. As long as money comes into your pocket (as yours), it must go down as an income.

3. And what are the things you spend on frequently? And what else do you spend on?
Once you have accurately determined your income, then you must make a list of everything you spend your money on frequently. This could include car maintenance fees, cable TV fees, internet subscription, etc. As long as it is a recurring expenditure, put it down.

The next step requires you to sit down, brainstorm and be honest with yourself. What are the little fixes that you spend money on that spoil your vine? What this simply means is, what are those things that you passively spend money on, but you don’t plan to? And what are those things you spend money on, but you don’t really need? For someone like me, such things included extra internet data and unnecessary transport fares. Once I found these holes, I blocked them quickly by focusing on avoiding them. See, you can’t passively overcome these things. You must be determined to and you must pay attention. If you don’t pay attention to them, you’ll find that you aren’t making progress with this. As you focus on them, you’ll find that with time, you’ll be able to ignore these expenses when they whisper your name. Because that what they do, they whisper. They never shout. That’s why it is easy to miss them.

4. How can you save better?
The next question to ask yourself is, ‘how can I save money better?’ Do you need to open another bank account? Or do you need to keep your money with someone you can trust so that you won’t have access to it? Whatever you come up with should be the best option for you. The trick is to come up with as many options as possible, including seemingly stupid options. You never know which would be best after all.
Make a list of these several ways you can save. Try to come up with at least twenty. Most of the time, you’ll find that the twentieth option is the best. Brian Tracy taught me this trick. The twentieth option is embedded deep in your mind, and it is usually the breakthrough option you need. But you have to work hard to get it.

5. How much can you invest?
The is the final question to answer in this process. You alone know how much of your income you can invest and how frequently you want to do it. You also need to find out the best investment opportunities available and what the interest rates are. You must decide beforehand how long you’e willing to invest. Some opportunities have time caps. Find out what these time caps (time limits) are and see if you can work with them.

Investment opportunities include food processing (one of the things I’m investing in), poultry farming, catfish rearing, franchising (Dominos, McDonald’s, KFC, Samsung Stores, Apple Stores, etc.), small business opportunities, etc. Note that every investment has risks involved. The higher the risk, the higher the reward prospect. Invest wisely.
Note that investing will also require sacrifice, discipline and commitment. That is why this process started with me asking you to work on yourself. Have a great financial life ahead.
Do you find this article relatable? Share some of your financial management challenges or exploits with us.

Photo Credit: Dreamstime | Andres Rodriguez

David I. Adeleke is a personal development writer and blogger. He is the main author on www.davidadeleke.com where he is currently running a #100DaysofGrowth series.Follow him Twitter: @DavidIAdelekeYou can also like his Facebook page: David Adeleke’s Blog

19 Comments

  1. lola

    April 2, 2015 at 6:28 am

    Thank you, David!

  2. Dynamicseyigold

    April 2, 2015 at 6:41 am

    This piece was very helpful. Thanks @davidladeleke

  3. Adeleye Oluwatosin

    April 2, 2015 at 8:53 am

    One of the steps av takn to a better personal finance is av stopped unnecessary outn, as a corper I tend spend more due to d fact dat I av two source of income, this year I increased my savings to 10-15 percent nd abt to start investment plans…at d end of my service year,I shld be more wiser with my personal finance cos am learning new stuff as each day unfolds on finance..tnks for sharn ur tips..really helpful

    • David Adeleke

      April 2, 2015 at 10:20 am

      I know what it is like to be tempted to spend needlessly as a corper as I am one myself. I’m happy you have a grip on your finances. Thanks for sharing Tosin.

    • Call Me Gorgeous..

      April 2, 2015 at 11:53 am

      With all the abbreviations….argghhhhh!!!!
      Please write well madam!

  4. AsMyself

    April 2, 2015 at 9:54 am

    Thanks for sharing. I’ll just share something personal about saving.

    A group of friends and I planned a Girl’s Weekend Away in Dubai two years ago. I told my husband (who in my innermost church mind, I was expecting/hoping to pick all the bills, as usual), and he said “you’ll need to show how much of my financial support you need by showing me how much you can save towards your trip.” I was half-vexed. Money flew out of my account faster than it got in, how was I to save? He asked me to make a wooden savings box and silly as it sounded, I agreed.

    Next goal was to not put any denomination lower than N1,000 bills into the box. I agreed. I started. Some days I would “rag” hubby to put money into the box for me. Some days I would need to “quickly buy recharge cards” and be tempted to touch the box, but hubby and the carpenter connived to make the slit so small, it was impossible to even use a knife to bring out any money. On and on till travel time…

    The day we broke the box, I was shocked, overjoyed, emotional. First things I said: “I’m RICH!!!”. Seeing all the bills – proof of my sacrifice, determination and discipline – made me feel fulfilled. When we finished counting, I had my ticket, visa, hotel money and LOTS of extra for shopping. We’d already sent in our bit for hotel as that had to be paid off at an earlier date. I did the conversion of my savings to USD, I was a happy woman. My hubby was impressed. So impressed that he refunded my hotel money i’d earlier sent in, paid for my visa and ticket, and “dashed me 1m to shop”. He’s also promised to buy me a bag I had been raving about and trying to afford since the previous year. He fulfilled his promise. I was over the moon.

    Before I travelled, I banked half of the money and i had maximum fun with my girls. That one lesson, I learnt it very well. It will never leave me, ever. I hope someone can learn anything, no matter how small, from this. And forgive me for the long post.

    • David Adeleke

      April 2, 2015 at 12:05 pm

      Thanks for sharing. Your story really teaches me something. And I’m happy for you.

  5. chi

    April 2, 2015 at 9:57 am

    Please were can I get the book?or someone get it for me? GRIN….i am seroius about getting the book please anyone???I deas on were?

    • David Adeleke

      April 2, 2015 at 12:00 pm

      YOu can get it online. Just google The richest man in babylon pdf.

    • Frances Okoro

      April 2, 2015 at 12:20 pm

      I got mine from CMS on the Island(assuming you are in Lagos) you can check there for it.

  6. Ephi

    April 2, 2015 at 10:28 am

    With finances, one of the things I’ve realized is “little drops of water makes a mighty ocean” – sometimes it’s tempting to think what’s the point of saving a small amount, what difference would it make, but in the long term it makes a huge difference. Setting aside a sum every month is the most painless way to save for the future. Over time, it can build up into a worthwhile amount. If you had invested £50 every month for the past 30 years it would now be worth £94,450, assuming about 6 per cent average annual growth. It takes discipline but it’s very much worth it.

  7. chee

    April 2, 2015 at 11:48 am

    One day,I heard abt this book from Dr N,so I bought it for #400,it really changed a lot about my savings pattern last year,i used to be overconfident in my spending ability and believed I was thrift lo and behold I started saving and found out I usually overcook and much ended up in d trash,i blocked that and I usually us up everything before restocking coupled with electricity issues so I don’t buy so much although I visit the market frequently which I don’t mind cos I hope to hv 2m by d end of this year. I also noticed i’m tempted to buy clothes a lot cos of visiting asoebi bella,na so I caution myself # d desire of d eyes doesn’t originate with d father# haha na so I dey do am, not that I look unkept but hv come to realise that u don’t hv to spend all ur earnings pursuing high fashion to look good!. Lately I digressed a bit so tnks for d post,i’ll dust my book, read it again and get back on track
    Pardon d epistle, BNers!

  8. Frances Okoro

    April 2, 2015 at 12:36 pm

    Wow!
    This is a worthy advice that should be heeded by everyone!
    I haven’t gotten around to writing in my article on finances but the deal is some of us are so slack with our spending habits and what we need is discipline..
    Some of us are eating away our future-myself inclusive sometimes.
    It might be painful to put away some cash but the end product gives joy indeed(like the story of the travel to dubai up there)

    It’s easier to immediately transfer our savings to another account immediately we get it.
    Don’t wait.
    Don’t let it stew. Transfer it to another account, preferably one you don’t have an atm card for.

    We can get our finances on track. Yes we can

  9. grateful

    April 2, 2015 at 12:50 pm

    Thanks sooo much for this. working on it right away!!!

  10. the generous economist

    April 2, 2015 at 1:35 pm

    Decided to keep tabs on my monthly spending for March….after my analysis..found out that I had spent almost 50k on transport….and 50k feeding myself alone….was shocked….apparently my 400 daily cab fees in ph and one off lagos cab fees (that city’s transport system is expensive) had amounted to a lot….what suprised me was that this was a month where I didn’t really move around….or eat anything I would consider luxury..so I can imagine what my spend in previous months had been….apparently little tiny drops make an ocean!!!

  11. Author Unknown

    April 2, 2015 at 3:19 pm

    Great article David. You know what’s interesting is how addictive investing and saving can become once you get hooked. It’s a decent addiction and can be fun. The first step is indeed learning to save – the good old rule of thumb of spending less than you make. Having said that, and knowing how inflation can kill that saving vibe (not to talk of miscellaneous expenditure in Nigeria – diesel, diesel, and more diesel :), one key to saving is increasing your income. I believe the human well-being requires some occasional ‘spoiling’ of oneself, and spending on luxury items/ services that many consider wasteful can actually help the economy (not to mention one’s mental health). Basically, do not spend more than you have, but do not be so tight that the economy (or you) suffers for it. If you need that extra internet data to read David Adeleke’s article on BN, lol, it just might not be a bad investment after all.

  12. ikmb

    April 2, 2015 at 5:26 pm

    very interesting article David…i re-ignited my saving habit last week after i saw a colleague”s savings. already shocked at how well i have done just within a week!
    “where there is a will, there’ll always be a way!”

  13. bee

    April 3, 2015 at 1:50 am

    That idea of transferring to another account immediately your pay check comes in really worked for me this past year,I was able to save up enough to aid my relocating to another state,and it is this savings that has helped my life, because I have not been able to secure a job since I moved. The most important thing is to remember there might come a day when you will not have, so today that you have do not spend it all. That lesson I am still taking myself as I tend to have this impulsive shopping attitude. I will read that book you recommended, thank you.

    • David Adeleke

      April 4, 2015 at 5:36 am

      You’re welcome. My Twitter handle is in my bio after the post. Please let me know what you think about the book when you’re done.

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