Ever heard of the Parkinson’s law? It states that expenses would always rise to meet income. Sometimes getting a raise at your current job or landing a better paying job or even getting that 13th month salary, comes with a tricky side to it. On one hand, you have more money in your pocket and on the other hand, your expenses seem to have doubled over night.
You would most likely find yourself asking “where did all the extra money go?” and if you aren’t so financially aware, you might never get to retrace your steps to find out what exactly is “chopping” your money.
The truth you might be shying away from is that you decided to take an uber everyday to your place of work instead of the regular “Danfo”( a danfo is a term used used to refer to commercial buses in Lagos, Nigeria). Even more, you decided to switch from having fish in your meals to eating with chicken wings at every meal.
These seemingly little changes you make all at once to befit your new social status, can send you straight into lifestyle inflation faster than it takes to get to bikini bottom.
You can avoid this unpleasant fall by choosing to be more deliberate in your spending and saving culture with these four easy steps:
- Save first:
As soon as you get that pay check, resist the temptation of spending first and take out your savings to a separate account you can’t touch. Employ the 50 20 30 rule with your income. This means , spend 50% of your Income on recurrent expenditure like taxes , feeding, transport e.t.c, 20% on savings and 30% on every other thing you might want. All of these can be easily done by employing auto save functions.
2. Stick to a Budget:
If you are going to make progress in being financially free, you undoubtedly have to discipline yourself to make a budget and stick with it. Remember expenses will always rise to meet income so you have to be deliberate enough to know where your money is going.
3. Invest your savings:
Its good to save some cash for the rainy day but it would be better if you can identify credible investment opportunities to grow your savings instead of stacking it up in the bank .
4. Make upgrades gradually:
If you so desire to upgrade your lifestyle, learn to do so gradually. Decide to activate one upgrade at a time. This saves you from being swamped with lots of expenses and helps you better prioritize your expenses.
