Managing hard-earned money effectively can seem like an impossible task in Nigeria’s current economic climate characterised by high inflation rates, naira devaluation, and slow economic growth.
Many salary earners struggle with stagnant incomes and rising living costs. However, with some financial acumen and a disciplined approach, one can take control of his/her finances. Developing financial literacy skills and cultivating consistent money management habits is key to making the most of our salary, achieving financial stability and reaching our goals despite economic uncertainty.
Speaking on this, the group executive chairman of Lancelot Group, Mr. Adebayo Adeleke said, “It is important to remember that building wealth takes time, patience, and consistent effort. One has to start by creating a budget, focus on saving and investing for the future.”
He also noted that one can increase income as well, by taking on a side hustle or asking for a raise. By taking the time to understand your finances and make smart choices, you can build a strong financial foundation that will serve you well for years to come.”
Adeleke added that “building wealth as a salary earner is possible, but it requires a plan and consistent effort, saying by creating a budget, contributing to a retirement plan, investing in low-cost index funds, and increasing your income, you can take control of your finances and start building wealth today.”
Ways To Build Wealth As Salary Earner
With disciplined saving, smart budgeting, and careful investment, even a modest salary can lead to long-term financial success.
Create a Realistic Budget: Start by tracking all your income and expenses. A detailed budget helps you identify unnecessary spending and allocate funds for savings. When you know where every naira goes, you can make informed decisions that support your financial goals.
Build an Emergency Fund: Unexpected expenses can derail your financial plans. Set aside a portion of your income regularly until you have three to six months’ worth of living expenses. This safety net protects you from emergencies without derailing your long-term wealth-building efforts.
Practice The ‘Pay Yourself First’: Approach Before paying bills or spending on luxuries, put money into a savings account. Consistently setting aside even a small percentage of your salary ensures that you build savings over time. This habit creates a foundation for future investments.
Avoid Unnecessary Debt: Excessive borrowing can strain your finances. Limit the use of high-interest loans and avoid spending beyond your means. Focus on using credit wisely and repaying debts quickly to maintain a healthy financial balance.
Invest In A Diversified Portfolio: Look into investment opportunities that offer returns above inflation. Whether it is local equities, mutual funds, or real estate, diversify your investments to spread risk and benefit from different sectors. Even with modest initial investments, compounding returns can make a big difference over time.
Explore Side Hustles: Supplement your salary with additional income streams. Side gigs such as freelancing, online sales, or consulting can boost your cash flow and provide extra funds for investments.
Continue Learning And Upgrade Your Skills: Invest in yourself by acquiring new skills and certifications. Up skilling can lead to better job opportunities, promotions, or a higher salary. Continuous learning is a long-term investment that pays off through improved earning potential.
Plan For Retirement Early: Even if retirement seems far off, start contributing to a pension plan or retirement fund now. Early planning benefits from the power of compound interest, turning small contributions today into a substantial nest egg in the future.
Network And Seek Mentorship: Surround yourself with financially savvy individuals. Networking and learning from mentors who have navigated the challenges of building wealth can provide practical advice and open up opportunities for growth.
Overall, building wealth on a limited income requires commitment, strategic planning, and financial knowledge.
