How to budget on a N300,000 salary

Earning as high as N300,000 in Nigeria today sure puts you in the top echelon of salary earners.

According to the Nigerian Bureau of Statistics NBS, Nigeria’s minimum wage is N30,000, so a N300,000 salary puts you at least ten times above the national minimum wage.

To put this more into context, we may consider the current civil service pay structure. According to statistics from the Lagos state government Harmonized Public Service Structure HPSS, a grade 14 state worker earns between N325,518 to N457,952.

These are top government officials and earnings anywhere in the region of these salaries definitely puts you way ahead of a lot of civil service and private sector workers.

While these numbers suggest that one can live a lavish lifestyle with N300,000, the reality is far from that.

In today’s Nigeria, N300,000 per month would actually let you live on average and failure to plan or budget properly might plunge you into financial trouble.

A Perth Partners infographic, shows the reality of living on N300,000 per month and the realities are indeed appalling. For instance, after spending conservatively and saving for rent, a worker would be left with no more than N15,000 for miscellaneous expenses.

The most worrisome part of the data is the fact that investing was not factored in. Apparently, a worker earning N300,000 can save, pay for their rent, bills, transportation etc. without putting anything aside for investing and still live from “hand to mouth”.

Little wonder, many workers who have worked for the statutory 35 years in civil service leave with almost no investment on the ground.

It is clear that thriving and surviving on a N300,000 paycheck requires a thorough and well-calculated plan to eventually escape the proverbial “rat race”.

How much is enough? Will a pay raise help my financial situation? Can one eventually kiss financial struggles goodbye?

Unfortunately, a very good percentage of workers experience varying degrees of financial difficulty. CNBC statistics show that about 70% of Americans feel financially stressed.

That is, seven out of ten Americans experience financial problems of one sort or another. The problem can be linked with financial literacy.

According to Credit Donkey, only 32% of US households prepare a budget.

This goes to show how many people have a spending plan as against spending on impulse. Spending without a budget only works when one has substantially more money than their needs and wants and definitely not in a case of scarce resources like a N300,000 salary earner.

Hence, it is not only advisable but indeed necessary for salary earners to not only draft but commit to a budget.

How to budget on a N300,000 salary

  • Understand the reality of the situation: Some salary earners are yet to realise the severity of the prevailing economic situation in Nigeria. For example, the NBS economic report for August put inflation figures at 24.08%. The cost of petrol has surged year-on-year by 216%. The reality of the matter is that the purchasing power of the same salary earned a year or two ago has drastically reduced today. Hence, more financial prudence must be applied. Understanding the reality of the situation makes the individual see budgeting as a necessity and not an option.
  • Assess your net income: Do you know how much you take home on average every month? For some, these numbers are not steady as allowances and other benefits differ at different times of the year. However, to create an effective budget you need to get a very specific amount you expect every month and work with this number. Assuming ambiguous figures or expecting more than is available may lead to budgeting errors.
  • Create a spending limit: Admittedly, it is difficult these days to allocate exact amounts to expenses because the prices of everyday items fluctuate wildly. The other option on the table is setting a cap on your spending. For example, you may cut off unnecessary spending once your expenses cross a certain threshold.
  • Cut off impulsive spending: Living off a N300,000 salary invariably means some expenses are off your reach especially if your goal is to avoid financial ruin. Unplanned expenses should be avoided. Only make expenses that have been planned beforehand. Avoid the urge to impress people with your spending or trying to “keep up with the Joneses”
  • Cut costs as much as possible: Creating and sticking a budget may be nearly impossible if you do not cut existing costs. For instance, experts recommend that your rent shouldn’t take more than 30% of your salary. However, instead of renting an apartment that takes up 30% of your salary, you may opt for a lower-tier property that costs way less or choose apartments in low-cost areas.
  • Seek professional financial help: For some, the solution may require them to see a financial counsellor. The job of the counsellor/ advisor is to help identify financial problems and proffer solutions. A financial advisor may identify bad spending habits or unrealistic savings expectations as the reason for the budgeting difficulty and help you with practicable solutions to help you improve.

In conclusion, living on a N300,000 monthly salary may require you to adopt a prudent financial plan.

The scarce financial resources require tact, discipline and flexibility to stay on top of your finances, invest and have enough savings for the rainy days.

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