4 Ways You’re Losing Money Without Realising It
[adrotate banner=”4″] Money is such an inexhaustible topic – we talk about earning it, investing it, spending it, and even sometimes losing it. We’re usually focused on the first three and barely pay any attention to the likely ways we have been losing cash. Most of us don’t have trust funds waiting for us, so every naira counts. Being on the lookout for money-sucking expenses can go a long way in increasing your disposable income. I’m going to let you in on things you’re doing too much of or not doing at all that could cost you some dollar bills (or whatever currency you spend). [bctt tweet=”Tracking your expense schedule, asking for a discount and buying items in bulk can help save up cash and thereby reducing the risk of losing money – @adeyojuwon” username=”SheLeadsAfrica”] 1. Bank Charges It’s so funny that the banks are starting to do the exact opposite of what they’re meant to be doing- helping people save money. The Fix You probably have more than one bank account/debit card. Each account attracts individual maintenance costs. A simple solution to ridiculous bank charges is trying as much as possible to have one savings account and one debit card. This will help eliminate charges that may arise from owning multiple accounts. You can reduce constant cash transactions and erase the need for unnecessary bank fees by having a budget that’s restricted to how much you’ll need for a week. 2. Delay in Paying Off Debts While taking a loan isn’t a big deal, delaying pay-off is quite a big deal. Especially when it has interest attached to it. Interest accumulates over time so delaying your debt pay-off inevitably increases the amount you’ll pay eventually. This means you’re gradually losing money. The Fix Once you have an inflow of cash probably due to holiday bonus or a salary raise, it is advisable you pay off your debt as soon as possible. This could give you a little extra to spend on other things and potentially save you a lot in interest payments. 3. Avoiding Negotiation Another money-draining factor that might not have ranked high on your list is negotiation. A lot of market vendors on this side of the world rarely quote the actual prices of their products. Most of the time, you’re expected to bargain and beat down the prices a little bit more. This negotiation rule also applies to the professional world. You’re expected to negotiate your salary and not simply accept what you’re initially offered when you apply for a new job. According to a paper by Harvard Business School, women are most likely to agree to the first offer on the table and lose money in the process, as well as better chances for career growth. It is time we change the narrative. The Fix Weighing other options available to you by knowing what prices other vendors are offering will go a long way when it comes to saving money. This also applies to knowing what other employees earn before you take a new job. This similarly applies to online stores, when I was buying my new phone, I checked a couple of online and physical stores to get the best price and avoid being overcharged. Always remember that avoiding negotiation comes with a price! 4. Subscriptions Technology comes at a cost. There is a cost attached to watching an endless stream of movies and listening to your favourite music. There’s a long list of other subscriptions- magazines & newsletters, fitness groups, diet plans and a whole lot more. It’s easy to forget what you’re subscribed to when payments are done automatically. The Fix You should only subscribe to plans you use regularly. This will help you avoid wasting money on plans you don’t get the most from. Certain subscriptions can be done with a group of people to save money on the total cost. Other significant ways you might be losing money includes wasting food, cancelling your Uber or Taxify rides, and impulsive spending. Interested in contributing for She Leads Africa? Click here.
Oluwatosin Olaseinde: Time is your biggest leverage in investing
I started my 1st job 10 years ago when I turned 21. And I had no savings culture or investment plan. This lingered for the 1st 5 years of my career. I went from zero salaries to over one hundred thousand per month and my expenses surprisingly grew at the same pace. Interestingly, over the years as I got an increase in salary, the same pattern occurred, I acquired a new taste and my expenses grew at the same pace as my income. Then I realized that in fact, it isn’t how much you earn but instead what you do with what you earn. I had lost 5 years of an opportunity to invest. I had lost 5 years to make my money work for me. A portion that could have been invested had gone unaccounted for. Where do I start from? Let me introduce you to our benchmark – Inflation. So inflation measures sustained the increase in prices of goods and services in an economy over a period of time. In other words, inflation signifies the time value of money. Tracking inflation from an investment angle ensures that what I can buy with N1,000 in 2018, I can still buy it in the future with the N1,000 plus the interest I earn on the N1,000 capital. Whenever you’re investing, look for opportunities that give you a return that is at the minimum equal to the inflation rate. That way, the value of money is preserved. [bctt tweet=”Whenever you’re investing, look for opportunities that give you a return that is at the minimum equal to the inflation rate – @tosinolaseinde ” username=”SheLeadsAfrica”] What are your options? 1. Savings/Fixed Deposit account This asset class offers an average of 5% per annum. While fixed deposit offers an average of 10%. Nigeria’s current inflation rate is higher than this, as a result, the returns on a savings account isn’t a good return for the money you worked hard for as it is not high enough to beat inflation. 2. Treasury Bills/Government Bond The government issues T-bills and Government Bonds when it needs to borrow money via the Central Bank of Nigeria. T–Bill is short-term in nature while Govt bond is long term. The key differentiating factors between T-Bills and Government Bonds are timing of interest payment and interest rate nature. For T-bills, the interest is paid in advance. For instance, if you plan to invest N100,000 in T-bills for a year at an interest rate of 11%. You will pay N89,000 to invest in the T-bill (the interest rate is paid in advance). Then recoup the capital of N100,000 at the end of the term. On the other hand, Government bond interest is paid quarterly, the interest rate is not fixed like that of Treasury bill, it is floating. Always compare the rates on T-bills and Bonds to the inflation rate. [bctt tweet=”Before you invest, compare the rates on Treasury bills and Bonds to the inflation rate – @tosinolaseinde” username=”SheLeadsAfrica”] 3. Mutual Fund This is an investment vehicle made up of a pool of money collected from several investors for investing in securities such as T-bills, Bonds, equities, commercial papers or even real estate. There are several types such as – Money market fund. Your capital is relatively safe due to the nature of the instruments it invests in. (T-bills, Government bonds, and commercial papers). You can start an investment with as little as N5,000. The investor can also compound by contributing regularly to an existing mutual fund account and re-investing the interest accrued. 4. Equity The value of a company after all liabilities have been deducted. A share a is a smaller unit of a company which measures the financial performance over time and provides an opportunity for investors to buy into it. As an asset class, a share offers value in two ways: Capital Appreciation: This is a growth in the value of the shares. E.g if you buy UBA’s share at N4 and after 2 years, it is worth N8. Dividend Payment: This is the profit distribution to shareholders. It is declared on an annual basis per unit of shares. 5. Real Estate This is the investment in properties. The properties range from virgin lands, commercial buildings to residential buildings etc. Real Estate generates return via capital appreciation, due to increase in the value of the property, and through rental income. In a country like Nigeria, a bulk of real estate growth comes from the appreciation of the property. Real estate return depends on the type of real estate asset. Location and purpose of property plays a critical role in value addition 6. Personal Development This is my favorite class of investment. You are your greatest investment. Unlike of all the other options, you are immune to inflation rates, currency devaluation or value erosion. Take that course to take you to the next level, take up new challenges, prepare for new opportunities, read those books. Ensure you are deliberate about improving yourself. It is one to know all the investment options available, it is another to take the right step. Time is a great currency here and the earlier you start the better. It is much easier to start now than trying to play catch up 10 years to retirement. You owe it to yourself to pay yourself first which means investing now. Oluwatosin Olaseinde is a chartered accountant with 10 years of experience in accounting, corporate finance, auditing, and taxation. She has worked with several multinationals – Bloomberg TV, CNBC Africa, BAT She currently runs Money Africa, a personal finance platform that teaches people to build healthy financial habits, cut down on unnecessary expenses and generate multiple income streams.