Your financial  freedom does not lie in the amount of salary you earn.

The human being is such an insatiable being such that the more he gets, the more he wants.

A couple of weeks ago, I had a conversation with a former school mate whom I had seen almost three years ago. He knew where I worked as at the last time we met. So he asked if I was still working with the company. I told him I had left for a different company. His next question was, “Is the salary ok? Or better?” In response I told him “Am not sure even the president is ok with his salary oo. Am not sure anyone can earn enough bro. It depends on how one manages. Because in same company people may earn than others but still be in debt”. He was left in no choice than to agree with me.

That was the conversation that inspired this piece I am sharing with you.

Have you noticed that in a company where there is a huge disparity in salaries, even some of those at the higher level receiving much salaries are the ones who are heavily indebted?

They are the most successful at contracting  loans. No bank would deny them of any loan because their salaries can cater for the loans. When assessments are done and the repayment struck out, the salary goes down. Meanwhile,  because the salaries of those at the lower levels cannot cater for huge loans, they are denied by the banks and for that matter, they have no options than to live within their means.

Do not forget, if a person uses to make up the whole of his salary over the month, a slash would mean he must get a back-up from somewhere until the loan is paid in full. Do not tell me the loan would correct that. How long would the loan amount stay in his account especially when taken for a project?

If money more could end your financial struggles, just look back and consider how much you were earning when you joined your company. At least today, you receive more salary than before. You have had increases in salary over the years. Is the difference between what you earned then and what you earn now lodged in your account or in an investment somewhere? If you would agree that you have made up expenditure on those increases over the years, then you can rest your mind from resolving your problems in the next increase in salary. Not even a hundred percentage increase would guarantee you that freedom. The maximum number of months that increase would sustain your financial sufficiency is three months.

Your lifestyle would change. The ten Cedis you used to cherish would look too small to you now. Your desire to move into a more befitting apartment would rise. You would then begin to give attention to the frustrations public transport known as “trotro” is causing you making you opt for a private means of transport. You would become aware that you could access a bigger facility because you earn more.

You may earn as much salary as you want but with the wrong financial attitude you would remain indebted. Wrong financial attitude such as buying without planning, spending money to build a lifestyle to meet societal expectation when that could wait, could be your quickest push to financial troubles. It is better to save towards a course. The more you are able to save towards a course, the less financial support you would require if it becomes necessary.

Have you bothered to find out how many subordinates in your workplace pray each day to receive the amount of salary you receive monthly? Do you know they think if they receive what you receive every month their problems would be over?  Would you tell them you are happy with your current salary and can assure them that their problems would be over if they get to your level? If you cannot help them determine so, why do you think the salary you are aiming at as your benchmark would solve your problem?

Back in my National Service days in 2007, my first allowance was about GHC122.00. That was virtually enough for a twenty-three-year old man who had never earned a salary before. I quickly made up an expenditure to make that figure. I went into debt thereafter although minimal and was cleared eventually.

Then I landed my first employment as a Sales Representative with about GHC270.00 after service. It looked good. I made up the amount and later when the salary was adjusted to some GHC370.00 it appeared equally good. I swallowed the amount and went into debt thereafter. 

I made conscious efforts to skip debt in my last two months with that company before moving onto a new one. It was not easy. But because I knew the challenges that comes with borrowing, I stood my grounds to take myself off such burdens. It is never pleasant to take money from someone for something that could have waited such as adding up to buy a mobile phone, a laptop, and the likes, only to carry such money at the end of the month to pay back. The necessary pain that goes with it is enough to guide all of us. You wish that money remains with you. That is what makes people refuse to settle debts they have accumulated. 

I adopted a self-motivating quote afterwards “Until I learn to save, it is easy to spend. Once I learn to save, it becomes difficult to spend”.

Have you noticed that even those lower than you are doing marvelous things with their meager salaries? How are they doing it?

The only way to be free financially is to adopt stiff financial discipline. These include:

¬Spending within your limit. If you earn a hundred Cedis and your expenditure at the end of the month goes to a hundred and twenty Cedis, you have accumulated a debt of twenty Cedis. It doesn’t matter if the addition is a gift. If you remain in that position, remember that gift would not be constant.

¬Put aside some amount of money every month no matter how small it would appear. It should be the practice of everyone to put aside a minimum of 10% of income aside as a means of investment for the future. I must admit is quite a difficult thing to do, but as the saying goes, nothing good comes easy. Deny yourself gratification today for future gratification.

¬As much as possible, keep a separate savings account from your normal salary account. Your Automotive Teller Machine with you at all times and operating a single account with an intention of saving, you can be assured of wiping that account clean before close of every month. Operate a separate saving account from your normal everyday account and if possible, refuse to pick an ATM card or keep it far from reach.

¬Plan towards what you would want to do and save towards it. There is no better mode of planning your financial life than planning what you could afford. Adopt a savings culture such that if there would be the need for urgent borrowing, it would be minimal.

¬As much as possible, avoid taking loans to do these: renting an apartment, wedding and any such non-revenue generating ventures. It is difficult to do all of these without seeking financial assistance especially at these crucial moments. But, consider this. You take a loan to rent an apartment of which you pay 2 years advance. The facility is supposed to run for a period of 4 years. If the loan is only able to fully pay the 2 years advance, where would you get the next rent amount after the expiration of the first 2 years? If it was for the purpose of marriage, do not forget your income would shrink by the proportion of the repayment amount. Life would be tougher then you would agree taking care of some additional being.

It is never late making amends when already in debt. I am with the believe that when these is followed, the right foundation would have been laid to build on for a brighter financial future.

¬Pay your debts gradually and consciously. Make a determined effort to pay your debts first. Those you have with banks are deducted either at source or at the bank. That of colleagues is likely to be refused. Do not forget they are the same people you would run to immediately you are in need when the bank refuses you because they assessed your inability to afford any additional credit. Clear such debts gradually and with consciousness.

¬Stop borrowing further to stay afloat. Borrowing without care would only push you to assess one credit facility after the other just so you can constantly meet your needs. Focus on ending one facility before committing yourself to another.

¬Taking one loan to offset the other would make you more indebted. Having worked with a bank at a point in my life, I have assisted many people to assess loans to offset other loans. In some circles, it is called balance transfer. It has its positives at helping someone who has assessed loans from many angles the interests of which appears higher. In such instance, assessing a single facility that would bring your monthly repayment down as compared to the total of the existing facilities with the other banks would appear prudent. This is possible when the interest on the new facility is lower as compared to the others. As technical at this is, it is important to assess the merits and ensure they are beneficial before venturing. In the absence of that, it is needless to pick a higher interest facility to pay off a lower interest facility perhaps for promise of more credit. That remains a debt.

¬Concentrate on clearing your debt and avoid societal pressures. Sometimes just for the purpose of living up to ascribed statuses rather than achieved statuses, we are pushed to lift our living above what we really could afford. This results in borrowing from sources available to maintain such statuses. Avoid that and live within your means.

Remember, getting the foundation right is everything. You would get the building right.

Borrowing is not a crime in itself,  the purpose of the borrowing can make you miserable. Be informed and let us get it right from scratch.

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