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How to Stop Living Salary to Salary

By Joy Ehonwa


“Blessed are they who finish their December salary in December, for they shall discover the true meaning of endurance in January.”– Facebook Update.

When I saw that status update I started chuckling, and then stopped abruptly when I realized there actually will be some people who would have a tough January because they have spent all of their December salary. Often, many salary earners, young and old, find that they have too much month at the end of the money, a cycle that keeps repeating itself month after month.

Having lived like this before, I know that people in this situation have a tendency to believe that the size of their salary is to blame.  However, realizing that it is all of your own making, due to your own choices and financial habits, is the first step in breaking out of this rut.

Based on my own experience, here are 7 steps to take if you really want to take control of your finances in 2013.

1. Track your spending

This is typical recommendation from financial advisors, one that Nimi Akinkugbe emphasized at a seminar I attended last year. Start by tracking all of your spending on a daily basis, for at least a month. I know that keeping track of daily spending can be difficult, but you really need to know what you’re spending money on. This is the only way to stop the leaks. Looking at a record of where all your hard earned money really goes is an eye-opener, and you just may be surprised at what you discover.

2. Stop borrowing and draw up a debt repayment plan

Borrowing is quicksand that can bury you very quickly. If this is one of the reasons your finances are in a mess, then you already know this. Stop the bleeding. Decide never to borrow money from anybody (family or friend), bank or finance institution again- and that also means making a commitment to never buy anything on credit, even if you are ‘sure’ you will have the means to repay. Stop getting into more debt.

Then draw up a plan to get out of the debt you’re already in. Make a list of your debts, organizing them from smallest at the top, to largest at the bottom. Then focus on the debt at the top, and start paying it off as quickly as you can. When that amount is paid off, give yourself a pat on the back! Then take the amount you were paying and start paying off the next largest debt. Continue this process until you pay off all your debts. This could take all year, but it is a very rewarding process, and crucial to your financial freedom.

3. Pay yourself first- start saving immediately

The next most important step you can take when starting out on this road, is to open a small savings account if you do not have one. Start making regular deposits, at least 10% of your salary. If you can’t squeeze out 10%, then see step 4 below. A savings account will help you stabilize your finances. It also gives you something to fall back on when a genuine emergency comes up, so you don’t find yourself broke or back in debt. You will have some cash to pay for that emergency, and you can use your regular salary for standard expenses.

4. Review optional expenses

If you can’t find 10% to save each month, then you are living above your means and you need to cut some things from your spending. This is where tracking your spending comes in handy, but even if you don’t track, you already know some of the extras you spend on — cinema, pizza, Chinese food, magazines, clothes, gadgets, books-just to mention a few. You don’t need to cut everything out, but skipping this today and that tomorrow can add up.

Then, take the money you didn’t spend on these optional items, and put it into your savings each payday. Keep increasing this amount over time. Chances are your waistline will thank you too.

5. Make a budget and stick to it

Budget: a word dreaded by many. However, liberating yourself from the paycheck to paycheck syndrome will require you to have a financial plan. If you do it right, you’ll find it’s not so difficult. You can use a simple spreadsheet, or a notepad and calculator. List all your standard expenses (rent, internet, etc.) and their amounts, and then your flexible expenses (groceries, movies, eating out, etc.), and then your irregular expenses (things like car maintenance or school fees that might not come up every month, but break them into estimated monthly expenses — if you spend N90, 000 a year on your sibling’s school fees, budget a N7, 500 monthly expense). Now match all of this up against your income. Your expenses should be less. If not, see step 4 above.

6. Activate online banking

You’ll still need to discipline yourself, but the less cash you have lying around, the less you’ll be tempted to overspend. Keep your money in the bank and transfer when you need to make payments.

 7. Plan for Unexpected Expenses

The last thing you want is for something to happen unexpectedly and upset the stability you’re trying to build. You must be pro-active about this. If you can afford it, open another account for expenses such as medical bills and car repairs. That way, you can use your regular budget for the stuff it’s meant for, not for these “unexpected” expenses.

Once you’re past the month end to month end syndrome, there’s a whole world of personal finance options available to you, such as investing and making your money work for you.  But getting past these first stages is important. Get on it and enjoy the process!

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Joy Ehonwa

Joy Ehonwa is an editor and a writer who is passionate about relationships and personal development. She runs Pinpoint Creatives, a proofreading, editing, transcription and ghostwriting service. Email: pinpointcreatives [at]

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