Do you look at your account at the end of the month and think ‘Where in the world did all my money go?’ This is a common question many people ask themselves. I mean, you work hard and make decent money, but somehow you find yourself spending all the money and you can't account for what you spent it on. Recent research by Yorkshire Building Society revealed that nearly one in five Britons have less than £100 in savings, 13% have no savings at all, and 26% admit to holding less than £500 in savings. We are trained by society to spend any extra money we get.
Lifestyle inflation is keeping many captive. You get a raise at work or a cash windfall, and all you can think of is that new car, that new house, or that holiday. There is this expectation that you have to up your lifestyle as your income increases - bigger houses, bigger cars, more stuff to put in the houses, etc. No wonder the money comes and goes in a flash - no one saves, no one spends their money on investments … where do we go from here? Financial freedom is unfortunately far away from those that have no clue where their money goes.
This new month, I want you to start working out how money is leaving you. Look at your bank statement and fish out money leaks. Do a direct debit audit and cancel out unused subscriptions to mags, gyms, utilities, Amazon Prime, paid TV, etc. I encourage people to do a monthly budget. A budget helps you figure out how much money you earn, spend, and save. It helps you balance your income with your regular expenses so you don’t overrun. If you can’t handle the idea of tracking every penny that you spend via a budget, it’s still a good idea to review your income periodically and compare it with your expenses. At the very least, you'll figure out whether you are shelling out more than you are bringing in.
As we wrap up the year 2021, I encourage you to start spending more of your money on assets and less on liabilities. An asset is something that puts money in your pocket, e.g. investment in stocks and shares, rental property, a business you own. A liability, on the other hand, is something that takes money out of your pocket, e.g. the car you drive (the bigger the car, the more money you lose every month). Money is all about opportunity cost. Every purchase you say ‘YES’ to means a ‘NO’ to something else. Every £50 you spend at the perfume shop is £50 you can no longer spend investing in your business. How much of your money every month goes into buying assets?
About Nike
Oyenike Adetoye (aka Nike) is an impactful speaker, author, and personal finance expert. A Chartered Management Accountant by profession. Nike is the founder and CEO of LifTED Finance, a private financial firm that educates, coaches and supports people on their journey through financial fitness and wealth management.