₦airaland Forum

Budgeting is the easiest way to stay on top of your finances and take control of your money. There are different budgeting methods available depending on your preference and financial goals to help you manage your money effectively. You must first establish your goals before you create a budget. Knowing how to budget is key to helping you achieve important financial milestones. Here’s how to create a monthly budget based on your income and expenses.

Determine your total budget number
The first step is to calculate your net income, which is the amount of money you earn less taxes. If you are self employed or don’t receive a regular paycheck, you’ll need to estimate how much you’ve earned in the past months and subtract taxes from the average. This gives you a clear picture of your take-home pay.

Decide on a budgeting system
Once you know how much you have and what your goals are, choose a budgeting method that works best for you. Try out the different budgeting methods and tailor your budget to your specific needs and goals.The popular options are the zero-based budget (income minus expenses equal to zero), 50/30/20 Budget (50% to needs, 30% to wants, 20% to savings and debt repayment) and the Envelope system(form of zero-based budget that’s focused on using only cash).

List your potential expenses
The next step is to list out all the things you’ll need to spend money on for the month and label whether they’re fixed or variable. Fixed expenses are bills you can’t avoid while variable expenses are more flexible. Once that is done, start grouping your expenditures into categories. Then prioritize each category into essentials, nice to haves, non essentials.

Allocate funds
Start allocating funds to the essentials before moving on to the nice-to-haves and non-essentials. Fixed expenses are easier to list since the cost is usually the same month-to-month. For variable expenses, you’ll need to do some math to find the average.

Adjust and update budget
The last step in creating a budget is to compare your net income to your monthly expenses and make necessary adjustments. If your expenses are higher than your income, look for categories you can cut expenses on. Consult your budget always before spending and reallocate funds if you under or over spend. Review your budget always to ensure you’re on track with your goals.

The best budget is the one that you’re able to stick to. It's easier to budget if you visualize its long-term benefits. You can track your spending with budgeting apps or even with a simple spreadsheet. Whatever your financial goals may be, having and sticking to your budget will lead you to success. Improve your finances this year with OVERWOOD www.overwood.ng.

OVERWOOD started with one goal - to make safe, high-yield investments accessible to regular people in Nigeria. They want to give everyone an opportunity to grow their money regardless of the amount of money at their disposal.
They pool together funds from hundreds of retail investors subscribing with a minimum of N50,000, select the best and safest instruments in the market and share dividends daily with all investors. They also operate with a daily compound interest model. Meaning your daily interest is calculated based on your principal and previously accrued interest. Earn up to 15% annually on your investments. Learn more about OVERWOOD here www.overwood.ng.

Most people struggle with debt at some stage in life. The best way to get out of debt is to include an actionable debt repayment plan in your finacial plan and stick to it. It is easier to get into debt than to get out of it. Most times, debt can be incurred in a matter of minutes while it could take months or years to pay it off.
It's always best to avoid getting into debt but if extenuating circumstances arise, you should prioritize paying it off to ensure you have healthy finances.

If you are currently struggling with paying off your debt, here are some steps you can follow to become debt-free:

[b]Stop incurring more debt
[/b]The first step to getting out of debt is to stop accumulating debt. Getting out of debt will be harder if you keep incurring more. Avoid borrowing money from your family, friends, banks, etc. This step will not eliminate your debt but will help in the process of getting out of debt. Try to avoid getting yourself in situations that'll get you deeper into this financial pitfall.

[b]Organize your debt
[/b]You can do this by calculating how much debt you currently have, then arranging your debt according to priority so you will know which ones to pay off first. You will need to list the amount you owe, the interest payable, and the monthly minimum payment on each loan. It is easier to develop a debt repayment plan when you have all this information available. Choose a debt repayment strategy that works for you. Either by paying off debt with higher interest rate first (Debt avalanche method) or by paying off debt in order of balance amount(Debt snowball method).

[b]Increase your monthly payments
[/b]If you can pay more than the monthly minimum on your debt, you will get out of debt faster. Interests can exponentially increase the timeline you have for paying off debts. Assign extra money received towards debt repayment to get out of debt faster. Try to increase your monthly payments on smallest debt to be debt-free faster.

[b]Build an emergency fund
[/b]Having an emergency fund is necessary when trying to get out of debt, it prevents you from incurring more debt. Unexpected or unplanned expenses might be the reason you are in debt; an emergency fund will take care of such expenses so you do not end up borrowing again. Include this on your financial plan as a safety net.

You can take advantage of www.overwood.ng high-interest rate to build your emergency fund. An ideal emergency fund has up to 6 months of living expenses saved up.

[b]Have multiple income streams
[/b]Building multiple sources of income is a necessary step to get out of debt and avoid living paycheck to paycheck. An extra source of income will help you pay off your debt faster than you expect. This could involve starting a side hustle, getting a part-time job, or selling products online. Using the extra money you earn to pay off your debts is key to getting out of debt faster.

[b]Change debt-enabling habits
[/b]You will need to cut down on your expenses as much as you can if you want to pay off your debts faster. The fact is, more than half of Nigerians spend more than they earn each month. Once you track your spending habits, you will be able to cut off the excesses so you can live frugally. You can achieve this by replacing paying for DSTV with GOTV, cooking home food rather than eating out, and reducing your data consumption. Just try to live below your means for as long as possible until you can pay off your debt.

[b]Live within a budget
[/b]One of the reasons most people run into debt is because they do not know how to manage their expenses. To get out of debt, you need to be in control of your personal finance and the best way to achieve this is by budgeting. You need to live within a budget and cut down on your expenses to stop accumulating more debt.


Getting out of debt can be a difficult task but by practicing these habits and being disciplined, you will get out of debt in no time!

The most popular and easiest way for investors to invest in the stock market is through mutual funds. In Nigeria, most people do not have the necessary knowledge about the stock markets or how they operate; this could prevent them from investing. With mutual funds, people can have investments that are managed by professionals.

If you are looking to invest in mutual funds, this article will help you understand what they are, how they work, and the benefits you earn from investing in them.


What are mutual funds?


A mutual fund gathers money from multiple investors to invest in financial instruments such as stocks, shares, treasury bills, government bonds, etc. Mutual funds are beneficial to investors who do not have the required minimum capital to invest in some of these instruments. Mutual funds reduce the risk to investors because they consist of different investments.

What are the types of mutual funds?

In general, there are four broad types of mutual funds:

[b]Money market mutual funds
[/b]These funds invest in short term fixed-income assets like government bonds, treasury bills, etc. They are relatively less risky compared to the other mutual funds and offer the lowest returns.

Equity mutual funds
[/b]These funds are also known as stock funds. Equity funds invest in stocks of publicly traded entities and it makes the fund the most volatile, compared to the rest. They offer the highest returns because of the high risk involved.

[b]Fixed income funds
[/b]Also known as bond funds, these funds invest in corporate and government debt intending to pay a fixed income to investors. Bond funds have higher returns than money market mutual funds but not as high as stock funds.

[b]Balanced funds
[/b]These funds invest in a combination of stocks and fixed income instruments. It is a diversified portfolio with high returns and lower risk. Balanced funds typically consist of 60% bonds and 40% stocks. www.overwood.ng is an example of a safe high yield mutual fund in Nigeria that offers compound interest rates of up to 15% annually.


[b]How do mutual funds pay?

The two ways to make money on a mutual fund include:

Distributions: Depending on the type of mutual fund you invest in, you could get the distribution of dividends, interests, or other income the fund receives.

Capital gains: You could make money from selling the mutual fund for more than you initially paid for it.

What are the benefits of mutual funds?

1. Mutual funds help investors diversify their investments due to the different types of instruments they invest in. A diversified portfolio leads to lower risks of investments.
2. Professional fund managers are in charge of mutual funds. This means investors do not have to actively monitor their funds and they can trust the professionals to invest in the right mix.
3. Mutual funds are very affordable, there are some online platforms in Nigeria that allow you to start with a minimum of ₦100.

Mutual funds are perfect for long term investments and growing your wealth.

Diversifying your streams of income is just as important as diversifying your portfolio, especially in difficult times. Building multiple sources of income is a necessary step to avoid living paycheck to paycheck and the pathway to attaining financial freedom. Having an extra source of income is the most efficient way to build wealth over time. 

According to research, most millionaires have at least 3 sources of income. Building multiple streams of income is now a necessity and your salary should not be your only source of income. Here are 4 income streams you should work towards:

Profit Income
This is money you earn from selling anything at a profit. This is the entrepreneur’s forte. By identifying a need and catering to it, you can earn a little more than just extra petty cash. At some point, most people want to move from their salary to profit income but do not, due to the risks involved. The key is to start small and monitor the growth of your business consistently. This might take a lot of your time initially, but once you’ve found your balance and learned to manage it properly, the profits will keep seeping in.

Interest income
This is the passive income you earn from your investments or money saved in online savings platforms. Having this source of income is beneficial to you because it does not require active work. When interest income is combined with the power of compound interest, your finances will grow speedily over time. At Overwood, we offer daily compound interest to all our investors. Start your investment journey with www.overwood.ng.

Dividend income
This is money you gain as a result of owning shares in a company. Dividends are payments made to investors by listed corporations for putting their money into the company. Next to interest income, this is probably the most commonly known passive income source. Dividend investments include stocks, mutual funds, exchange-traded funds (ETFs), etc. While it can be risky, the payouts can contribute immensely to building your wealth over time.

Rental income
This is the income generated from renting a property. Rental income is a must-have because there is and probably always will be a strong need for real estate rentals. If you are interested in fixing up property or managing spaces, owning real estate rentals might be the thing for you. It’s one of the most reliable sources of income, but one of the drawbacks is the amount of money required to build/acquire an asset that can generate regular rental income.

As a beginner, saving your money could seem like a hard nut to crack. However, knowing the right steps to take will ease the burden off your shoulders as you work towards reaching your financial goals. 

If you are looking to start saving for the future, this article will guide you on the step-by-step procedures you need to take.



1. Create a budget
First, analyze your income and expenses, then create a budget that suits your needs. The 50-30-20 budget rule is a simple guide to manage your finances effectively. It states that 50% of your income should be spent on needs, 30% on wants, and 20% on savings and investments. 

You can also decide to spend 50% on needs, 30% on savings and investments, and 20% on wants. Just ensure that you create a budget that suits your financial goal.

Make a list of all your expenses and itemize them in their different categories (needs, wants, and savings/investments). Then, stick to your budget.



2. Limit your expenses
If your expenses are extremely high, you will need to cut down on the excesses to enable you to save a little extra. Identify the non-essentials in your expenses and reduce the amount of money you spend on them.



3. Automate your savings
To keep your savings plan in check, it is advisable to automate your savings. This would help reduce the temptation to spend excessively.


4. Invest your savings in different asset classes
After saving a significant amount of money, the next step is to invest. Make sure to choose assets that suit your risk tolerance, and diversify your investment. Diversification is the best way to play the investment game. It will help minimize the risk of losing your funds while still earning good returns.

At Overwood, we invest pooled resources in mutual funds, government bonds, money market instruments, capital market instruments, credit-backed instruments, and treasury bills. However, our investments are weighted towards money market instruments and bonds, because we are safety-first. Start your investment journey with www.overwood.ng and earn daily compounding interest rates of up to 12% per annum.

One of the most experienced challenges with personal finances is excessive spending. To attain financial freedom, there are certain principles to consciously abide by. A journey towards financial freedom requires being consistent with managing your finances effectively. This article focuses on five basic steps you can take to carefully cut down on excessive spending.

Avoid impulse spending
Effective money management is finding the balance between your earning, spending, savings, and investment routine. Impulse spending is simply an unplanned purchase that is not in your budget. It can be as minute as re-subscribing your monthly data plan to buying a dress. When you consciously stick to your budget, you’ll most likely have more money to save and invest in the long run.

Stick to your budget
The essence of having a budget is to spend on the most prioritized needs per time. When you spend outside of your budget, you are gradually robbing yourself of other necessities. To stick to your budget is to simply tell your money where to go at any given time.

Stop using your credit card
A credit card allows you to buy things you did not prepare the liquid cash for at the moment, which results in spending outside of your budget. Having your credit card with you often can lead to overspending. It can also lead to deduction of credit card charges which when added in the long run would lead to another major expense.

Automate periodic savings
Periodic savings on any online saving or investment platform like www.overwood.ng will help you to be consistent with your monthly savings and investments. You can as well automate other necessary payments, basically, payments that do not reoccur often.

Avoid money pits
Money pit is simply a major leakage on your financial resources and this is a result of impulsive spending. One of the most important steps to avoid a money pit is to carefully assess your financial plan and set aside a certain amount for emergencies.
To cut down on excessive spending, you will have to consciously go about it the right way. With these steps, you can consciously cut down on excessive spending and avoid the spending temptation.

With the rise in Ponzi schemes, choosing the right investment product can seem like a daunting task. However, if you do it the right way, you will reap the benefits of your investment in the long run.

If you are looking to invest your money wisely in Nigeria, there are some steps you will need to carry out to ensure that you’re making the right decision.

1. Invest in products you understand
Many first-time investors delve into the investment game with little or no knowledge of the products they are investing in. The right way to invest your funds is by investing them in different instruments that you understand, or with a company you trust. If a deal is too good to be true, it most probably is. Only invest in products you fully understand. At www.overwood.ng, we help our clients to invest their funds in safe, high-yield investment products by conducting due diligence on multiple investment products, then selecting the best and safest.

2. Research on a company before investing
Many people concentrate on products rather than the company providing the products. It is important to first carry out due diligence on a company before investing with them. That way, you would understand the model and intricacies of the investment before venturing into it.

3. Understand your risk appetite
Everyone has a capacity of risk they are willing to take. An aggressive investor is one who prioritizes high-risk investment products to low-risk products, while a conservative investor prefers to invest in low-risk products. Knowing your risk appetite will guide your investment decisions. The higher the risk, the higher the returns, and the probability of losing your funds.

After deciding on the amount of risk you are willing to take, make a list of your investment options and categorize them according to their risk levels (high, medium, or low-risk). Then, choose the right investment mix that satisfies your goals and risk profile.

4. Create an investment portfolio

Diversification is the safest way to play the investment game and this is why you need an investment portfolio. An investment portfolio is a set of assets owned by an individual (investor).

To create your investment portfolio, split your investment fund into three buckets, and maintain at least a 5% difference of each bucket.

5. Monitor your investment

As you invest in different instruments, don't forget to monitor your investments. You can also rebalance them when you go above the percentage you want to hold, and then diversify your investment again.

If 2020 has taught us anything, it is to always be prepared for the unexpected. It is vital to plan ahead for the new year if you want to achieve your goals. Setting goals is the first step in turning the invisible into the visible. The next step is devising a realistic actionable plan to make your goals a reality.

2021 shouldn’t be a year to leave your personal finance to chance. Instead, take deliberate steps to improve your finance. Here are some steps you can take to help improve your financial situation:

1. Build a 3-month emergency fund:
This is crucial to save you from financial pitfalls that come with unplanned events that demand urgent financial remedies. It is advisable to save at least 6-month worth of your expenses to meet up with any unexpected needs. Try not to leave the emergency fund in a savings account. Instead, you can place it in a safe, high-yield investment vehicle to earn some interest.

2. Pay off all your debt:
If you’re in debt, it is advisable to include a debt payment plan in your budget. You can decide to pay it off by either using the snowball method (paying off debt from the smallest to largest regardless of interest rate) or the avalanche method (paying off debt with the highest interest rate first). Make paying off all your debt a priority so you can divert the funds to other important financial goals.

3. Save at least 20% of your income:
Saving is one of the healthiest financial habits you can adopt, and the importance of saving can’t be understated. 20% of your disposable income is just the suggested minimum, but you can decide to be more aggressive with your savings with a higher percentage depending on your financial goals.

4. Develop another source of income:
Building different income sources frees you from the dependency on a single paycheck. It also dampens the effect of economic downturns on your earning potential. If you plan to be financially free in the coming years, this is one of the most crucial steps to get you to that dream. Find a problem and solve it. Better still, monetize and capitalize on your hobbies/interests.

5. Start investing in safe instruments:
It is not enough to save. Take a step further by investing. When you invest for the long term, you’re making your money work for you which inadvertently helps you build your wealth. Start investing in safe instruments like www.overwood.ng offers to protect your principal while earning high returns. By investing, you also enjoy the benefits of compounding interest, which is regarded as the eighth wonder of the world.

6. Re-invest your investment income:
Reinvesting your investment income can help you build your wealth faster. It grows your wealth steadily by increasing the earning potential of your investments. This compounds your total returns, which add up over time. When investing, think long term, and be deliberate about not touching your investment or investment income.

7. Write a will and buy life insurance:
These steps are two important financial decisions that are often overlooked. They provide a financial safety net when you need it the most. If you have loved ones depending on you, it is important to take these steps to secure their financial future. You can also insure other assets you own e.g. your car/home. Take your time to carefully go through insurance policies before making a final decision.

Most people's reality has been altered by the effect of the pandemic either mentally, emotionally, or even financially. A lot of companies were affected negatively, and the ripple effect caused salary reductions, job losses, and the worst case, the company folding. According to quartzafrica, “In Nigeria, the unemployment rate came in at 27.1 percent just in the second quarter of 2020, which is the highest on record so far.”.

If you’ve been lucky enough to hold on to your job, you have to take strategic steps to keep it. More importantly, prepare your finances for the unexpected. The workforce is always vulnerable to cutbacks due to unpredictable economic downturns, but by improving your professional stability, you can weather any unemployment storm. These steps can also help protect you.

Grow your professional Network
There are long-term benefits in growing and maintaining a professional network. While nepotism can be seen as a foe to many, building positive relationships with people in your field can help get your foot in a door that may otherwise be closed. This step can be considered being proactive, and the internet age has made it easier to connect with professionals using social media platforms like LinkedIn and Twitter. Take advantage of this opportunity.

Make yourself indispensable
Companies are looking for strong leaders, and the only way you can become one is by practicing good work ethics. Show up on time, be a team player, and do your job to the best of your ability. Focus on contributing positively to the company and showcase your value. By surpassing the “model employee”, your chances of being laid off will be low, especially when unemployment starts lurking. It may sound like additional pressure, but it will pay off.

Make saving a priority
Saving money in Nigeria with the current economic situation can prove to be a difficult task, but building up your cash reserves right now is paramount. Beef up your emergency fund and find ways to cut your expenses. It is vital to have constant periodic savings to protect your finances. If you struggle with saving consistently, take advantage of the digital savings platforms in Nigeria and put it on automatic.

Invest, Invest, Invest
Investing here goes beyond your personal finance. While it is always advisable to build a diverse investment portfolio in a safe, high-yield investment vehicle like www.overwood.ng, the best investment has always been in knowledge. Any amount spent on training is an investment in your best product, yourself. Take classes to improve your qualifications. Examine your options and determine the right move for you. Invest your time and money in upping your skills, so you're more employable.

Start a side hustle
Another way to protect yourself from unemployment is to ensure financial stability by starting a side hustle. With this, no matter what happens, you’re not solely reliant on your job for income. Start with finding a part-time job or monetizing your passion. Take advantage of the information available to help turn that idea into a money-making engine. Earning extra income opens the door to the possibility of unexpected success, which is great for your financial health.

Lessons?
Investment = Maths + Logic

1. Never invest because it feels good.
2. Never invest because it sounds good.
3. Never invest because you like the manager.

Maths: Do the numbers make sense?
Logic: Do you understand how it works?

Investment = Maths + Logic

Plan for 2021?
Safe investments like [url]overwood.ng[/url] offers for long term growth.

I would recommend you try [url]overwood.ng[/url]. A digital investment platform that offers safe investments in Nigeria with equally high interest rates.

Investment = Maths + Logic

1. Never invest because it feels good.
2. Never invest because it sounds good.
3. Never invest because you like the manager.

Maths: Do the numbers make sense?
Logic: Do you understand how it works?

Investment = Maths + Logic

5 Common Money Mistakes To Avoid

Money mistakes are particularly destructive because they can undo years of delicate planning and diligent financial habits. People who lose everything can often trace the beginning of their financial troubles to one or two errors that multiply into an avalanche of struggle.

Take note of these 5 common mistakes. Avoiding them can be the difference between financial independence and financial bankruptcy.

Mistake 1: Frivolous spending.
The secret to realizing your financial goals is to save money. However, it is impossible to save if you spend all your earnings. Avoid this money mistake at all costs. Determine your values and set financial goals, then align your priorities with these goals before making purchases.

Mistake 2: Spending excessively on housing.
According to the rule of thumb, your housing expense shouldn't be more than 30% of your income. Although for some this is a great start, the 30% figure may not be the best for you. The amount you allocate for housing depends on your list of expenses and your financial situation. Choosing to live with roommates is also a great way to cut down on housing expenses.

Mistake 3: Living from paycheck to paycheck.
One of the most common money mistakes people make is to spend every penny they earn. It is very important to save so you can have something to fall back on when you have an unexpected expense. It's a good idea to use the 50/15/5 rule to organize your finances. Allocate 50% of your income to your monthly expenses, 15% towards your savings and 5% for your emergency fund. You can then use the leftover to build investments.

Mistake 4: Not planning for retirement.
We tend to forget how important long term goals are, so we easily bypass them. However, it is easy to save towards these goals when you begin early. Start by saving at least 15% of your annual income towards retirement and utilize the power of compounding to earn interest on your funds by investing them.

Mistake 5: Not investing.
The secret to attaining financial independence is to get your money working for you. Understand the time required for your investment to grow and the level of risk you are willing to tolerate, then invest the funds in investment products that match your goals. You can start your investment journey with a firm like [url]overwood.ng[/url]. OVERWOOD offers products to help you grow your wealth while protecting your principal always. They are a safety first investment firm in Nigeria.