MANAGING YOUR FINANCES

Jacob Enamaye
 Learning Objectives
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At the end of this session, you will be able to:

• identify strategies for managing finance
• distinguish between needs and wants in order to make wise spending
decisions
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 The Problem
• Has this (referring to the video in the previous
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slide) ever happened to you?

• What was wrong with the man in the video?
• What is your money management currently like?
• Are you capable of managing your money?
• How can we effectively manage our finance?
 Strategies to manage your finances
1. Create a budget 3. Save for a rainy day just incase your company
is hit with a round of layoffs or takes a
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- Understand your expenses downsizing decision.

- Understand your income
- Consolidate your debt
- Slash or remove unnecessary expenses

4. Apply the 50/30/20 rule

30%
2. Set motivating financial goals. This will help you Wants 50%
weed out unnecessary spending. Needs
20%
Savings
 Identify short and long-term goals
Sara works in a small IT enterprise. When she gets back home after work,
she sometimes sits in her small balcony thinking about her future plans.
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Sara has a business project in mind: she wants to set up a small website
development business with her cousin, Emeka. She knows she can rely on
his expertise, as he has gained many years experience working for a big
company in the business.
Furthermore, Sara would like to do some entrepreneurship training by way
of preparation and also buy a more modern laptop. At the same time, she
is thinking of helping her parents renovate their house as the roof is
leaking and raining season is approaching. Also, her brother Chidi wants
her help to set up a barbing salon, and her younger sister wants her help to
set up a street food restaurant. Sometimes Sara also dreams of buying a
plot of land to build a house of her own.
 Discussion of the case study Setting up
new business

• What are Sara’s goal? Build a Replacing

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house roof
• Which of these goals can be
achieved in the short-term?
 Replacing roof
 Buying a laptop Buying a Buying a
 Training in entrepreneurial skills land Sara’s goals laptop

• Which goal will take longer to

achieve? Setting up
sister’s
Establishing
Chidi’s

• What are your financial goals? restaurant

Training in
business

entrepre-
neurial skills
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 Managing money wisely
• Managing your money doesn’t require any special skill; you just need
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to be motivated.
o Be a smart spender
o Create a budget
o Stay within your budget
o Keep financial records to manage your money
 Be a smart spender
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Helpful principles
1. Distinguish between needs and wants
o The difference between this two is very simple: a need is a basic necessity, without
which you cannot live
2. Determine what expenses can be reduced or eliminated
o It is possible to reduce spending on wants.
o You can also change your habits and reduce your needs, e.g. the amount of electricity
you use each day
3. What can you do with the money left over, after you have reduced or
eliminated your spending on certain items?
o Pay off your debts more quickly; use it to invest in something important such as an
asset, save for the future etc.
 Create a budget
• What is a budget?
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• A tool for managing your income and expenses.

• A tool for taking decisions, planning and using your money in the best
possible way to achieve your goals.
• How do you begin to draw up a budget?
o First, know the parts of budget. [Income, Expenses, Savings]
o Calculate your income and expenses
 What are the different sources of [major] income to your business? E.g. stocks, salary, earnings
from other business, allowances/remittance from friends/family members
 Identify what constitute your essential (needs) and optional (wants) expenses e.g. travel, gifts,
ceremonies, insurance, loan repayment, office supplies, delivery, advertising, etc.
 Calculate your essential expenses (the needs) before planning the optional expenses (the wants)
 Sources of income Amount (Naira)
Fixed income
Monthly salary 80,000
Sales 25,000
Remittance from her elder sister living abroad 20,000
Sub-total fixed income 125,000 Income
Variable income
Overtime earnings 10,000
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Commissions 30,000
Sub-total variable income 40,000
Total income 165,000
Savings
   
40,000 Savings
Sara’s Expenses 
Essential expenses (needs)  
Budget Rent 20,000
Utilities (water, electricity etc.) 15,000
Food, health care/medicines 45,000
Travel and transport (car and public transport) 5,000
Salaries and wages 15,000
Communication (telephone bills) 5,000
Expenses
Monthly loan repayment 10,000
Sub-total (needs) 115,000
Optional expenses (wants) 
New attire for mother for her friend’s 60th birthday 10,000
Purchase of new sewing machine for mother (Postponed) --------
Sub-total (wants) 10,000
 Create a budget cont’d
• Establish your savings capacity, i.e. how much money you can put to one side
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• Make sure you have enough for needs. This is another reason for budgeting.
• You may sometimes need to adjust your budget to take into account
unforeseen circumstances or changes in your financial situation (deficit).
o Have money set aside for unforeseen expenses.
o Saving regularly
o Increase income source or reduce your expenses (eliminate all optional expenses)
o Change your habits so as to spend less
o Draw up a savings and debt repayment plan
 Stay within your budget
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• Remind yourself frequently how much you have planned to spend.

• Include in your budget some provision for unforeseen expenses.
• You must know your total income amount. Keep track of what you spend.
• Make sure you don’t spend more than you budgeted for.
• If you overspend on one purchase, spend less on another.
• Make a list of ways of reducing your expenses.
• Involve your family in drawing up your budget and helping you keep to it
 Summary
• Setting clear goals are important for our business and personal plans;
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• One helpful principle to help us manage our personal and business

money is to distinguish between our needs and wants;
• Avoid over-indebtedness.
 Resources
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1. Key reading: How to manage your finances. Available on Google

classroom
2. http://www.youtube.com/watch?v=rd_gGHKz0F0.
THANK YOU
Jacob Enamaye

09053806175

Jacob.enamaye@lapoinstitute.org

www.lapoinstitute.org