1. PAY YOURSELF FIRST
  2. SAVINGS 101
    1. Save a Percentage of your Income
    2. How Much to Save Each Month
  3. IMPLEMENT A PREPAYMENT APPROACH
  4. HAVE “NO SPEND” DAYS
  5. USE BASE LEVEL THINKING
  6. RESIST UPGRADING YOUR LIFESTYLE WITH YOUR INCOME
  7. ASSET MANAGEMENT
    1. Use a Run to Failure Approach
    2. Apply the Total Cost of Ownership Approach (TCO)
  8. ACCOUNT FOR YOUR INCOME
  9. MAKE SMALLER ASSET PURCHASES EARLIER ON
  10. SEEK TO BE FINANCIALLY INTELLIGENT
  11. INCREASE EARNING POTENTIAL BY UPSKILLING
  12. LOOK OF OPPORTUNITIES
  13. BECOME A GIVER.
  14. THINK AND PLAN GENERATIONALLY
  15. MAKE LUMP SUM PAYMENTS ON YOUR MORTGAGE
  16. UNSUBSCRIBE FROM MAILING LISTS
  17. UNDERSTAND THE POWER OF COMPOUNDING.
  18. ONE MORE INCOME STREAM
    1. Dependency Leads the Way to Independency
  19. STRENGTHEN AND GROW YOUR NETWORK
  20. CLOSING COMMENT

As believers, we should not only focus on spiritual development but also be holistic and discuss issues of everyday life, like financial management. Against this backdrop, I have prepared the following tips to help everyone improve their money management and financial health. I hope you find them useful.

PAY YOURSELF FIRST

I first heard this concept from the book Rich Dad, Poor Dad. The concept states that before you pay any creditor or make any purchase, you must first pay yourself. Treat yourself like a creditor, the first and most important creditor. When you pay yourself first, you say, “This portion of money will not be used for expenses but to build my financial portfolio and improve cash flow.

The approach hinges on reducing disposable income so less money is available for purchases. Having less money in your hands will encourage you to make better economic purchase decisions.

For example, if your net salary is 5,000 dollars and you pay yourself first and remove 1000 via automatic bank transfer to a savings account, your disposable income is now 4,000 dollars. This lets you consider your purchasing decisions based on 4,000 dollars rather than 5,000 dollars.

Most people don’t apply the pay-yourself-first system. They spend their entire net salary and try to save what is left over after expenses, but this is proven ineffective in growing savings.

SAVINGS 101

Save a Percentage of your Income

When saving money, it’s better to use a percentage of your income rather than a fixed amount. Some people make the mistake of saving a fixed amount each month, and when their income increases, they continue to save the same fixed amount, which means their savings don’t increase in line with their income. As a general rule, it’s best to save a percentage of your income, no matter how much you earn or where it’s coming from.

How Much to Save Each Month

In the Bible, God tells us about the following via Joseph when planning for leaner times: “Genesis 41:34-36: Let Pharaoh appoint commissioners over the land to take a fifth of the harvest of Egypt during the seven years of abundance.”

A fifth (1/5) is equivalent to 20%. So, aim to save at least 20% of your income to have a surplus stored up when hard times hit. History tells us that a recession or, at minimum, difficult times will appear because things are cyclical. As the cliché goes, “One day is high tide, and another day is low tide.  

Note “It is not about how much you earn; it is about how much you spend.” I must underscore that a big part of not building your savings is tied to your spending patterns and financial intelligence (see section below). I am sure many of us know of financially well-off persons who ended up bankrupt or falling on hard times. This is often linked to having poor spending patterns and not enough savings to rally them through financially difficult times. So, my friends, I encourage you to save. 

IMPLEMENT A PREPAYMENT APPROACH

Essentially, this is pre-paying your bill so that if you have a difficult month and need extra cash, you can stop paying a bill for one month and not be in arrears. This allows you to have extra cash to divert where it is needed most in the short term. Here’s a simple example:

  • Step 1 – Sum a particular utility bill (e.g. cable) for the past 12 months, e.g., $6,936.00
  • Step 2 – Find the average monthly bill value i.e., $6,936/12 = $578
  • Step 3 – Work out the extra amount (prepayment value) you should pay monthly i.e., $578/12 = $49.
  • Step 4 – Use this prepayment value and add it to your monthly billing amount going forward.

By paying just $49 extra monthly, in 1 year, you will be in advance on your Cable bill by one month.  This can be applied to as many bills as you can afford, and you can even extend it to loans or anything you need to repay. The intent is to build contingency into your life just in case an emergency arises, and you need extra cash. Always try to adopt this pre-payment approach where you can.

HAVE “NO SPEND” DAYS

Schedule 2-3 days each week and label them “no-spend” days (e.g., no eating out, no hanging out with friends, no online shopping regardless of how good the deal looks, etc). Doing two (2) days a week would be eight (8) days of not spending cash each month. So, let’s say you typically spend money six (6) days a week; if you extrapolate this for the entire year (2 no-spend days x 52 weeks) / ( 6 spending days x 52 weeks) = 33%.  This 33% is not a direct cost saving, but it gives you an idea of this initiative’s impact, especially if you use it on days you typically spend the most money (e.g., on weekends when you socialize / lime). This tip will cultivate a habit of frugality with money, assuming you don’t double the spending on the other days.

USE BASE LEVEL THINKING

Bring decisions down to their base level of what they are and what you truly need. For example:

  • It is not an expensive watch; it is just something to tell the time.
  • It is not a luxury vehicle; it is just something to transport you from point A to B.
  • It is not lobster; it is dead meat… you can get dead meat anywhere and in all fashions.
  • It is not fine wine; it is crushed grapes.

Bringing things down to the base level forces you to reevaluate your purchase decisions and the absolute need for them. This evaluation often shows that we live in excess because of pride, image, and status.

RESIST UPGRADING YOUR LIFESTYLE WITH YOUR INCOME

Many of us easily fall into this trap. As soon as we increase our income, many of our possessions start to look like they need upgrading. Our vehicle suddenly looks like it needs replacing, household furniture and appliances automatically start to look outdated, our mobile phone becomes inadequate, and you must get the latest version, and the list goes on. I say to us all, “Not because we have money that means we have to spend money“.

Readers should also be aware of the Diderot Effect. The Diderot effect is a phenomenon that occurs when acquiring a new possession leads to a spiral of consumption that results in the acquisition of even more possessions. In simpler terms, it means that buying something new can trigger a chain reaction of buying more and more things. For example, if you buy a new piece of furniture, you might feel the need to buy additional items to complement it (e.g side tables, lamps, carpet, vase, paintings for the wall, paint the living room), leading to overspending and accumulating more possessions than you actually need or use.

Therefore, I encourage us all to try and adopt the concept that you will only upgrade your lifestyle with every other salary increase or only after two consecutive salary increases. The wider the timeframe the better.  Try to keep your standard of living the same and save the money to have cash for investments and opportunities as they come your way.

ASSET MANAGEMENT

Use a Run to Failure Approach

Instead of changing your phone each time a new model comes out, change it only when it is defective. Similarly, instead of changing your vehicle every three years, change it less frequently. Or keep it until the maintenance required is no longer beneficial compared to a new purchase. “Think REPAIR before you think REPLACE.”

Apply the Total Cost of Ownership Approach (TCO)

“TCO is the purchase price of an asset plus the costs of operation. Assessing the total cost of ownership means taking a bigger picture look at what the product is and what its value is over time.

For example, when choosing a gas car vs CNG or electric car in a purchasing decision, buyers often look at the showroom price (short-term price). However, you should also consider its long-term price, which is its total cost of ownership i.e., showroom cost, maintenance cost, fuel expenses & insurance cost, resale value that you can get back when selling. These are the long-term costs and expenses incurred during the product’s useful life and ultimate disposal. The item with the lower total cost of ownership can be the better value in the long run”. – Reference: Total Cost of Ownership: How It’s Calculated With Example

In essence, you should buy items that provide better durability in the long term and/or better Value for Money (VFM) overall.  

ACCOUNT FOR YOUR INCOME

Improve your management, and you will improve your money.

No business runs without regularly reviewing its finances. You would be worried if you worked for a company that never reviewed or audited their accounts. You would even go as far as to say they are irresponsible and downright reckless. Yet, we still do this in our personal lives, so what does that say about us? Are we reckless? You cannot effectively manage what you don’t record, measure/trend, analyze, and take steps to improve.

Accounting for expenses is a big part of managing your money. You can use Microsoft Excel or download an app for your phone or computer, but make sure you have a formal system for accounting for your income and expenses.

I recommend the “You Need a Budget -YNAB” app. I literally cannot live without it to manage my finances. This app might not be for everyone, but you can research one that suits you best—but get one!

MAKE SMALLER ASSET PURCHASES EARLIER ON

Don’t use all your money to purchase your ideal first home or car that you want (Dream house, Dream Car). When you start your career, look for cheaper assets to purchase and build your liquidity and cash flow via aggressive savings.

Now, use part of your `savings to look for investment opportunities. You can purchase another small house and rent it out, invest in the stock exchange, get involved in real estate, or start a business. Then, later in life, when you are established, you can pool your assets and more easily obtain the “Dream” items you want.

In this volatile world, having a mix of savings and manageable assets increases your chances of survival compared to having expensive assets alone. Consider losing your job when young and having high monthly car or mortgage payments. A smaller installment at this stage of your life will allow you more flexibility to manage when life happens.

SEEK TO BE FINANCIALLY INTELLIGENT

Most of us don’t learn financial literacy in school, and many of us have less-than-ideal mentors, if any at all. So, one asks, “Where have you obtained your financial intelligence from?” I would venture to say that many of us are learning by accident or not making any strides to learn at all.

Money management is crucial and should not be left to chance. We must actively seek knowledge and continuously update it to stay current.  Purchase and read books, look at YouTube videos, listen to podcasts, higher a financial advisor, and speak to successful people you know.

Block some time for the next six (6) months and start on your journey of becoming more financially intelligent. Use this time to invest in yourself; the returns will be of lifelong benefit.

I have listed some excellent books you can consider reading to get you started.

You can invest in stocks, bonds, real estate, IPOs, and many other financial instruments. However, the best investment you can make is primarily in your financial education. Everything else is secondary when compared to this because everything flows from what you know, or don’t know, depending on how you look at it.   

INCREASE EARNING POTENTIAL BY UPSKILLING

What makes people wealthy or increases their income? As I see it, the answer is simple: get more skills. If someone is doing some plumbing in your house and while doing that, you also mention to them that you have an electrical problem; if they also have the skill of an electrician, then they can increase their income by also completing that job.

For example, if you are in sales, you should aim to get better at it (improve your skills). Always look to refine and improve your skills, and you will be able to increase your income.

I also suggest that once you have mastered a particular skill, you branch out to learn other skills, making yourself more diverse and resistant to economic downturns. It is basically about having multiple income streams (multiple skill sets). It can be as simple as a hobby that you can transfigure into a business that has the potential to bring in a decent income.

So don’t focus on improving your income, focus on improving and obtaining new skills and the income will appear since they are directly related

You can search for a course in your area or look at online platforms such as Udemy.com, Coursea.org, Edx.org, and youtube.com or similar sites.

LOOK OF OPPORTUNITIES

Great opportunities are few and far between, but small opportunities are all around us.

I remember a friend sending me an email some years back. It was an email with a one-liner statement indicating that I should look at this attachment. My friend was a banker working for one of the biggest banks in my country. Long story short, I opened the email and quickly browsed the content, but I did nothing.

Do you know what my friend sent me? He suggested that I purchase some shares in an IPO, which increased by 30% in three months. If I had put in 100,000 dollars, I would have had a return of 30,000 dollars within a short time. This was an eye-opener because something dropped in my lap that I did not benefit from.

Let me say this: the universe is not random, and you should not take your encounters with friends or casual acquaintances lightly. However, good or bad, always look at things as they are, i.e., God has ordained them. Therefore, I must embrace every moment as God wants to do something great in my life.

There are tremendous gifts all around us, but the thing is, we are not unwrapping them. Examples:

  • You might hear about a new project at work, and they are asking for team members. In that case, you should volunteer.
  • Search the newspapers for deals on real estate.
  • You hear a friend say they want to start a new business. Don’t stay quiet. Ask them if they are open to you also investing. 
  • A family member might be selling an asset to their family at a reduced price. Why not purchase it and resell it to make a profit?

Train your mind to look for opportunities.

Note: If you are not getting opportunities, then you are missing opportunities. For example, a missed opportunity would be if you read this entire blog and did not implement anything from it. 😓

BECOME A GIVER.

Many people want to become wealthy, but they are not givers or generous to people in their hearts. While I agree that principles work and that success will come your way if you apply them, God still sits high and looks low, and He ultimately decides who gets blessed. Therefore, why would God bless you when He knows you will keep 95% of it for yourself? What we possess (money, talent, skills, etc) must be used to improve the world and benefit others. Isn’t this what we are here for? To be in the service of others!  

Before becoming wealthy, learn to be a giver and bless others. Trust me, God will open doors faster and provide greater opportunities for you because He knows you will be a good steward and use the wealth in the service of others.

In this regard, I am sharing two books about giving with you; the first is one I absolutely love.

  1. The Go Giver – Bob Burg and John D. Mann
  2. The Law of Rewards – Randy Alcon.
  3. This is not a book, but this link gives some bible verses about giving.

I must close this section by sharing this Instagram video about giving from “Mdmotivator – 𝐙𝐚𝐜𝐡𝐞𝐫𝐲 𝐃𝐞𝐫𝐞𝐧𝐢𝐨𝐰𝐬𝐤𝐢”. Every time I watch it, I get emotional. Do have a view of it. https://www.instagram.com/reel/C66gRMOucvB/?igsh=MXMwdmFsY2dudnprNA==

Proverbs 11:25  (NIV) – “A generous person will prosper; whoever refreshes others will be refreshed.”

THINK AND PLAN GENERATIONALLY

As a Christian, I must relate to things from a spiritual standpoint, and the starting point for this section is Proverbs 13:22: “A good man leaves an inheritance to his children’s children, but the sinner’s wealth is laid up for the righteous.”

Everything we have discussed above and in this blog will help in this area of building generational wealth, but I would like to include the following pointers.

  • Get a Pension Plan – remember to increase this as your income increases
  • Create a Will – make it easy for your family when you are gone and pass wealth to the next generation.  I have seen families that ended up in chaos because siblings were fighting for the estate when no Will was in effect.
  • Make Investments & Own Businesses – (Ecclesiastes 11:2 – “Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land”). Having businesses is not just about securing your generation but the generation of the families you employ.
  • Obtain Life Insurance – this helps in multiple ways, e.g., repay debts if you die earlier than expected or leave an inheritance for your family when you pass. Life insurance helps you position the next generation on a better footing.

MAKE LUMP SUM PAYMENTS ON YOUR MORTGAGE

A lump sum mortgage payment is a one-time, substantial payment made towards your mortgage principal. This payment exceeds your regular mortgage payments and directly reduces the principal amount owed, allowing homeowners to save on interest and potentially shorten the mortgage term.

When you make a lump sum payment, the principal balance of your mortgage decreases. This reduction means you’ll pay less interest over the life of the loan, potentially saving thousands of dollars. Additionally, it can lead to lower monthly payments or a shortened loan term, allowing you to repay your loan and release your home sooner.

Example: Let’s say you have a 30 year mortgage of $240,000 with a 7% interest rate and a monthly payment of $1,597 for your principal and interest. If you made an extra payment just once every quarter, you’d pay off your house nearly 15 years early! That would mean cutting the length of your mortgage in half and saving a whopping $184,000 in interest along the way.

Reference: How to Pay Off Your Mortgage Early, The Mortgage Station.

UNSUBSCRIBE FROM MAILING LISTS

For those who do a lot of online shopping, I suggest you unsubscribe from the mailing list. These companies love to send you emails about sales and upcoming events, which only entice you to make unwanted purchases and spend money.

It is scientifically proven that habits are formed by Cue, Craving, Response, and Reward (How to Form Habits that Stick -James Clear). Removing the cue (email notification) can help curb your craving which leads to the response of spending.

UNDERSTAND THE POWER OF COMPOUNDING.

Investing isn’t just about how much money you have to invest. It’s also about how much time you have to invest it. That’s because of the power of compound growth.

Compound interest makes your money grow faster because interest is calculated on the accumulated interest over time as well as on your original principal. Compounding can create a snowball effect, as the original investments plus the income earned from those investments grow together.

I will not write much about compounding, so I kindly encourage you to watch this excellent short video on compounding to see how it works: Investing Basics: The Power of Compounding – Charles Schwab.

Note: As a rule of thumb, to see how long it takes for your savings to double, you can use the “Rule of 72.” Divide 72 by the expected rate of return.  For example, if your investments returned 6% annually, you would double your investment about every 12 years (72/6).

ONE MORE INCOME STREAM

Many of us would have heard the term, “multiple income streams” and it is exactly as the statement indicates, in that we should not only rely on one from of income. In this regard, all of us should have “one more (additional) income stream type of mentality”.

Use your existing skills, get new skills and abilities, do what you must, but ensure you get one more form of income. Some examples of this can be:

  • If you are good with Microsoft Excel or have some other skillset (project management, event planning, etc) then use a marketplace such as upwork.com or fiverr.com where you as a professional can be connected with clients who want services.
  • Translate an existing hobby (e.g. photography, painting, craftwork, etc) into something that can generate income.
  • Some jobs are inherently prone to overtime such as nursing, policing. Try and get on a roster to work more hours. This might not be a separate income stream approach but working overtime can help.
  • Purchase a vehicle and let someone work it as a taxi.
  • Get rental property.

In this modern age, never be satisfied with one form of income. Add one to make it two, then add another to make it three. Keep going and growing until you reach a saturation point.

Focus on that income stream like it is the only job you have, especially from the inception while it grows and stabilizes.  Work to turn that stream into a river of some kind. You will be surprised at what you might be able to accomplish. So be brave and launch out. As Suzy Kassem once said:

 “Fear kills more dreams than failure ever will”.

Note: I must add however that you should factor in work life balance as well, as we need to be well rounded individuals.

Dependency Leads the Way to Independency

I would like to round off this section by talking about independence. It might sound odd, but this topic actually relates to multiple income streams as noted above. Firstly, I would like to say that I don’t believe in independence for the simple reason that nothing is independent. For instance, the tree is dependent on the soil, the bird is dependent on the tree, the flower is dependent on the bee for pollination. The child is dependent on their parents, the student is dependent on their teacher, the borrower is dependent on the lender.

Ok, this list is getting long, but you get my point. Everything is dependent on something else for a need.  This is the way God has designed it, therefore why are so many people striving and aiming to be independent?

Here is how I see it. I want to be dependent! I want to be dependent on my job, so I work had and try to excel. I want to be dependent on the bank to give me loans to start businesses. I want to be dependent on the stock exchange to invest my money. I want to be dependent on my side business ( multiple income stream) to do well.

So, the more I am dependent on the varying financial streams around me, is the more I can become independent because if one stream fails, I have contingency, redundancy and a fail safe in the others. So, for me, I want to be dependent, because the more I am dependent is the more I can say I am independent.

This concept is more of a mental shift in that you should seek and maintain dependency first. Build it, value it, cherish it, embrace it. Then expand it outwards to apply to many different things, and in doing so, independence will naturally come.😊   

STRENGTHEN AND GROW YOUR NETWORK

I don’t know who coined it, but a popular cliché goes like this: “Your Network defines your Net Worth.”

I purposely don’t want to write much about this because I believe we all know about the power of association. For instance, this expression was drilled into my head when I was younger, “Show me your friends, and I will tell you who you are.”. Associate with the wrong people, and you can go down a disastrous path. Associate with people who can pull you up, and you will rise; it’s that simple.             

To help you along, I have included this link about networking. Mastering the Art of Networking: Building Connections That Count

One of the main benefits of networking is the wise advice that is obtained.  The Bible also tells us about this in the following scriptures.

  • Proverbs 15:22 (NIV) “Plans fail for lack of counsel, but with many advisers, they succeed”
  • Proverbs 24:6 “Surely you need guidance to wage war, and victory is won through many advisers.”
  • Proverbs 11:14 KJV “ Where no counsel is, the people fall: But in the multitude of counsellors there is safety.”

The intent is to get good counsel and advice and also develop yourself so that you can add value to others by counseling them. Again, I leave it up to you to research ways to improve your network. If I did not have a good network my friend above would not have emailed me the offer about the IPO.

CLOSING COMMENT

I close by saying this: in all your doing, don’t forget God:

Deuteronomy 8:18 (NIV): “18 But remember the Lord your God, for it is he who gives you the ability to produce wealth, and so confirms his covenant, which he swore to your ancestors, as it is today”.

If you found this blog helpful, please leave a comment below or share it around . I am sure all of us know someone who can be helped by the content .

Your Brother in the Lord,

Dane Miller – “God is the Author, I am the Pen”

Authored Book – What is the Woman Saying – Lessons from Biblical Women.

PS: I welcome your feedback on this blog post and encourage you to leave a comment below or subscribe/