A lot of people have declining finances, but they do not realize just how serious the situation is until something serious hits. And sometimes, people may not understand just how serious this is until it hits.
At the moment, tons of people have varying degrees of financial issues that are currently covered by their current income stream. For some people, the catalyst for financial ruin might be a big unexpected expense like medical bills or even loss of property.
The risk of ruining your finances is great because, in some scenarios, things can get really bad. According to statistics coming from the Nigerian Deposit Insurance Corporation NDIC 99.4% of Nigerians have a minimum of N500,000 in their bank accounts.
The question that begs for an answer now is what Nigerians would do if ever they find themselves in a life-threatening situation that requires over N500,000; say a million naira? Quickly, the issue of financial stability becomes a major necessity and not just a choice.
Five Hidden Signs That Your Finance is Struggling
Below I have put together some hidden factors you need to note, to tell your finances are ailing. Once you notice any of these factors, you need to act fast to get yourself back on track.
Very Little or nothing left after recurring expenses
According to experts, that recurring expenses should not take up over 50% of your annual income. What this means is that if you live in a place like Lagos and you earn around N100,000, your expenses like feeding, utility bills, and transportation shouldn’t take up to about 50% of your income.
If you notice that you are spending more than that then you need to reality check. Audit the numbers, and then take out the expenses that you do not need.
No or Small Emergency Savings
What happens when life hits you with unexpected expenses? If there are no emergency savings, you cave in and start looking for unnecessary means to handle the issue. According to Forbes, you should sink at least 20% of your annual income into savings to handle your rainy days when they eventually arrive.
Nobody sits and prays for bad situations, but sometimes, you don’t know what unfortunate or lucky event life might throw at you that would require finance.
Frequently Requiring Bailouts from Family and Friends
Surely being the family that owes everyone in the family is not a nice look for you. If for the most part, you find yourself owing almost everyone in the family money or you frequently ask for money from them, then your finances are probably ailing. Even if most of the time you pay back early, the frequency should at least give you a hint.
Living Above What You Need
Houses in Lekki for example cost around N2m per annum just for rent, and according to Chase experts your rent shouldn’t take up more than 30% of your annual salary. So, let’s say you take up such an apartment, and your annual income is 4m you are living above your means.
Surely you might just be doing it just to impress people and remain relevant, but you really should go for what you can afford and be stable with.
Having Just One Income Stream
This might sound like a cliché, but surely you do not want to place all your eggs in one basket. What occurs if your reliable nest egg disappears? You can still make the most of your money even if your usual workday ends at five o’clock and you have no free time to look into investing.
However, it is crucial to note that investing carries dangers, so you should learn more about it before making a purchase. If you’re idle, consider exploring side projects like content production, blogging, or freelancing.