Are you a paycheck away? - from abject despair

Life begins at the end of your comfort zone

If you were to miss a paycheck from your employer today either because you got relieved of your job, or your firm closed shop or whatever the “unfortunate” circumstance, how would you fare?

Imagine the hordes of financial obligations that must still be met in spite of it – the kids school fees, monthly family feeding, electricity bills, annual rent, waste bills and the rest! How do you imagine you would manage?

Perhaps you are one of those who typically do not ever want to think about it! Or just the mere thought of it stirs trepidation in your entire existence. Well as far-fetched as it may sound, many people are one missed paycheck away from potentially being homeless and bankrupt.

And this is scary!

Sadly, the economic situation that we have been enmeshed in the last couple of months leave very little to be desired. The future suddenly appears bleak and the uncertainty is so overwhelming.

Think about these?

– There is no amount of savings that can ever be enough to protect you from a job loss or redundancy. One major health crisis or an unfortunate accident can make a huge saving feel like a drop in an ocean of financial obligations.

– Have you considered ditching the country for a better quality life elsewhere in the first world countries, but you worry about leaving behind close family members that form the fabric of your social and mental stability?

– Have you considered everything about investing your hard earned cash in fast Ponzi schemes with the hope that you can get your returns before they turn on their investors?

– Perhaps you have thought about joining politics. Afterall everyone knows that there is easy money in there!

– And all these is without yielding to thoughts about joining the online fraud industry that Nigeria is renowned for or any of its other prominent vices.

I have probably made the waters even murkier with the statements above.

I cannot lay claim to providing explicit solution to the quagmire that missing a paycheck will ignite as this will depend on the individual vision for yourself and your family.

But I don’t know who needs to hear this – the good news is that you don’t have to continue living paycheck to paycheck if you’ve found yourself in this situation. You can break out of the cycle and get on the road to financial freedom and I will like to show you how.

Here are a few steps to guide you;

Reduce your expenses
At the crux of our existence as human beings, we really only need four things to survive. We need food, shelter, clothing, and transportation. However in the Nigerian context, you will also need to include fueling your generator and payment for basic bills (that is usually covered by Govt in other countries)

Anything beyond these four items is a luxury. A great way to determine if an expense is necessary is to ask this simple question: Do I need this to survive?

Even if something falls within those four basic necessities, it doesn’t have to be the most expensive thing. Find cheaper alternatives for your necessities and only purchase what you need. Until you are able to create cash flow in your finances, consider cutting out things like:

• Cable (or find cheaper alternatives to cable)
• Shopping
• Subscription services
• Eating out
• Hanging out

Cutting things out of your budget doesn’t have to be permanent. You are just making temporary sacrifices by cutting back on these luxuries. This approach allows you to save and pay down debt so that you can get out of the paycheck to paycheck cycle.

Increase your income
Once you’ve established a system and habit for managing your money, it’s time to increase your sources of income.

The whole point of increasing your income is to have more cash to save, pay off debt (if any), and ultimately invest. More cash does not mean more spending. Instead, in this case, it means more to work with.

There are several ways that you can increase your income. Things like part-time jobs (especially for IT specialist) are great for quick boosts to your earnings, but the ultimate goal is to find a sustainable and consistent way to make more money.

Ways that you can increase your income
• Take on a part-time or seasonal job – we have a lot of people working remotely as a second source of income. There are quite a number of these opportunities which would not require you to be physically available or to move around. Examples include teaching English remotely from the comfort of your home, or being a part of an advertisement outfit using your social media accounts to reach customers and earning money for it. These are just a couple.

• Start a side hustle from home. A viable and sustainable business can be initiated without compromising your performance at work. You can start making and selling handmade bags, jewelries or even baking cakes or catering for events during the weekend. There is no reason why you cannot start your own gig! Just look for a need to fulfil in your immediate environment.

• Find a higher paying job or career path. If you are still stuck up working in your industry and building a career, then do not stay too long on a job role lest you get disinterested. Look for better prospects and prepare and equip yourself for the next career level by training yourself for the next move.
You can do one of these suggestions or all of them! It all depends on your creativity and how much time you’re willing to sacrifice.

Save up for emergencies

Yes Save! Save! Save!!

Saving funds is not borne out of plenty, but out of sacrifice. Just like giving!
Do not spend as you earn, a lot of discipline is required to avoid slipping into the red zone with neon-lights blinking “debt” in red.

As you earn more money from your hustles and your investments, it is important that you save the funds coming into your account. Use the opportunity to save for emergencies. Having an emergency fund prevents you from getting into more debt to pay for unexpected expenses. With this fund, you are essentially creating a backup plan for yourself.
Ideally, you want to be able to set aside 3 to 12 months’ worth of expenses for emergencies. However, if you’re just getting started, aiming for at least N1,000,000 should be your goal. This amount typically covers the small emergencies that tend to come up.

You can also consider investing some amount in high yielding legitimate investment vehicles that would yield good interest every now and then.

No amount is too small. Start first!

Get on a budget
If you haven’t been doing this already, then it is just about time to start working on a plan. This is one of the most important steps to stop living paycheck to paycheck.

It is important that you learn to manage the funds at your disposals before you start managing the ones coming in. Quite frankly, if you don’t manage what you have now, earning more will only worsen the situation.

There isn’t any month where I haven’t first prepared a budget before I earned my monthly income. I know it takes a lot of discipline to keep to a budget, but you cannot be financially prudent without working within the ambit of a budget no matter how basic.

Your budget simply needs to guide your spending. It should include all of your monthly expenses, which should not exceed your monthly income.

Fit your needs into essentials and sundry, and then allocate part of your earnings to ensure it covers thinly the most basic and important requirement to sustain your financial objective.
No one ever became financially independent without being disciplined. No short cuts!!

As you start to work on these different ways to break the paycheck to paycheck, consider the benefits.

• Your overall stress levels will go down.
This directly correlates to the fact that you are not as worried about your finances anymore.

• You will have more life options because your finances are better.
You don’t have to stay stuck at a dead-end job and can take more time off. Plus you can save more, invest more, and even give back and help others.

• Your quality of life will improve.
When your stress is down and you have more options to choose from. The overall quality of your life and how you feel will start to improve.

• You can start pursuing your dreams.
Because life is meant to be lived and enjoyed and your finances, or lack thereof, shouldn’t be the roadblock in the way of the dreams that you have for yourself.

I sure hope you found this post helpful.

Please drop your comments, I will love to read from you.
Cheers.

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16 thoughts on “Are you a paycheck away?”

      1. Awesome article and beautiful advice. I totally agree with you. Infact this has becoms a going consern for me. I’ve scouting for a genuine alternative to increase my income. I ‘ve tried several options but to no avail.

  1. Oluwafemi Ogunrotimi

    Awesome Akin… quite detailed but permit me to add the concept of passive income, power of compounding interest and leverage. These are powerful principles for financial freedom, if you are on the right vehicle and there are few of them…

    I totally enjoyed reading the post as always.

    1. Thank you so much. I must agree that the concept of passive income is also one of the principles for financial freedom. Thanks for the comment Femi.

  2. This is an interesting take on an important issue that most people don’t want to think about or when they do, assume is not so urgent. You identified the problem and proffered workable and realistic solutions. Kudos Akin and more ink to your pen

  3. This message is quite absolutely referring to me…with this one would be disciplined…Thanks for this message Dukes✌️

  4. At the rate at which our currency is loosing value,One definitely needs to have multiple streams of income.So that even if one retires or has to leave their present job they’re still earning.
    Network marketing is one the Solutions and definitely working for me.

  5. thanks Akin, this helps to recharge the drive to be more mindful of over expending and also to strive for additional income generating options. Good one brother

  6. I’m glad that you wrote about this cos a number of people don’t even have a budget to work with after getting their paycheck for the day to day running of their homes.
    This has been what my hubby and I have worked with since we got married over 12yrs years ago and it has helped us save for the future.

  7. Beautiful piece. i love that part which says when your stress is down you have more options to choose from. It is deep. Many of us have a lot of opportunity but when you are stressed you don’t see clearly and when you see clearly you don’t have the clear head to choose properly. This well takes me back to 2000-2002, I took up a saving method that birthed my company it wasn’t planned but i was a able to stand tall and make clear judgement. Will share that with the house with the permission AA.
    This is a good one.

    Secondly My Dstv story and my children way back was also a wonderful time. Thanks for this write-up. It is good and took some tips to help

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