Thursday, 5 April 2018

Can We Really Live On Our Monthly Salaries?

In this economy where good jobs are scarce, you've finally got one (congratulations), but your monthly income tends to run out even before you receive the paycheck. Well, this is not a problem exclusive to the average Ghanaian. Six in ten Americans don't have $500 in savings, (though the average American will most likely have a better retirement because of e.g. reverse mortgage etc, a subject for another day) which means more than half of Americans cannot absorb a $500 emergency bill. In the UK, we're looking at four in ten (someone is low-key doing the Math and going like "but Tab, $500 is GHS 2,205 today and that's not some easy money" ... I agree). The point is, if those in countries where the average income is $857 a WEEK can't absorb up to 14.6% of their salaries for emergencies, then you know you're screwed if you live and work in a country where the minimum daily wage is less than $2.5 (two point five dollars, NOT twenty five).

The good news is, irrespective of your monthly income (and this is not coming from a person of privilege), there is always some steps you can take to gain absolute control over your finances. I wish I knew those steps, or I wish anyone knew those steps, but I know for certain, that the first step is to know where your money goes through tracking your expenses. If you don't have an idea of where your monthly income goes, you stand little to no chance of knowing how to gain this control you desperately need over your money. Your other option will be to increase your income streams; side hustles, freelancing online, teaching private classes, etc. but truth be told, it's far more complicated than how financial advisers make it seem. So let's talk about what we can control.

The most important reoccurring expenditures most of us have are food, rent, ECG/GWCL and transportation. Most of us don't buy clothes and shoes every month, so let's put that aside (RT if you buy clo ... you know what? nvm). To keep this post short, I'll single out rent and generalize the other expenditures. If you're someone who pays rent, have you ever considered the possibility that you might be spending more than you should on rent? I've had a good argument for renting in the past, and it's a good time to share with you just how best to know if you're making a mistake with your choice of apartment because of how much it costs.

When I had time to freelance on Upwork.com last year, I was scripting for a real estate YouTuber and one of the topics was "how much house can I afford?" Most financial experts (Time Money included) advised not more than 28% of income be pushed into mortgage repayment (and that's after making 20% deposit). If we are to transfer the same idea here, I'll say we have no business spending more than 20% of our income on rent. 28-30% on mortgage is fine, because you'll own the house when you're done with repayment, but you cannot spend more than GHS 200 on rent if you earn GHS 1,000 monthly, not under our current standard of living. Sacrificing more than 20% of your income on rent is not worth it and you'll feel the effect now and in the long run.

Finally, our attitude as Ghanaians towards mental health issues mean people with CBD (compulsive buying disorders) don't even know they have a problem. Those privileged enough to have the mental toughness and discipline to have control over their finances tend to shame those who don't. If you can admit right now that you can't save not because you earn too low, but because you spend on things that you shouldn't be spending on, then please seek help. If you don't have the means to afford professional help, start by making a monthly budget, a shopping list, and download an app that can help you track your expenses. Make the commitment to stick to these for a start and make progress from there, but ultimately, seek help. 7Cups might connect you to some professionals online to help you ... give that a shot if you still need to talk to someone.