Dear Dara,
Hey Dara, I’m a mom and the only one supporting my family financially. I have a one-year-old son and I have practically provided 80% of his needs. I had debts too. About 3 million naira in 2021, but as of now, I have a balance of about 400 thousand. I am currently exhausted as I have no savings because I’m either trying to beat debt or trying to pay for something my son requires. I can’t remember the last time I took out money to spend on myself- even body cream. I have stopped buying. My question now is, how do I create a realistic budget, where I pay my debt, have savings, pay my tithe, spend money on my son and still have enough to spend on myself? P.S. I earn 180k now. I run 2 jobs.
Dara’s response.
Hello there,
Before I begin, please know that I am sending you the warmest hug ever. I can’t imagine what you are going through. Please know that this phase will pass. Let’s start by analysing your situation:
You’re the breadwinner of your family with a one-year-old, working two jobs to earn 180k monthly. You’re juggling debt repayment, your child’s needs, and personal expenses while feeling exhausted. First, you aren’t earning enough to cope with your expenses, not to mention of savings.
The practical step is to invest in yourself with in-demand skills like Data Analytics, Social Media Management, Virtual Assistant Training or wherever your gift lies so you can earn more.
Consider looking for new job opportunities to increase your income. Check out our opportunities corner in our newsletters for something relevant to you.
Secondly, you need to track your expenses for a month to understand where your money is going. I know it’s simple to attribute it to your son’s needs, but you need to track it so you can have a clear picture of where your money is going. Once you have this data, we can categorize your expenses into:
- Needs: Rent, food, diapers, transportation, tithe, utilities, debt repayment.
- Wants: Entertainment, eating out, shopping, subscriptions.
- Savings: Emergency fund, debt repayment beyond the minimum, and personal savings.
Budgeting Method: 50/30/20 Rule
A simple approach is the 50/30/20 rule:
- 50%: Needs (including debt repayment)
- 30%: Wants (flexibility for personal spending)
- 20%: Savings and debt repayment (beyond minimum)
Example Budget:
- Income: 180,000 Naira
- Needs: 90,000 Naira (rent, food, diapers, transportation, utilities, debt repayment)
- Wants: 54,000 Naira (entertainment, eating out, shopping, etc.)
- Savings and Debt: 36,000 Naira (emergency fund, additional debt repayment)
Tips for Saving:
- While things are tight. It would be best if you prioritised saving at least 5-10% of your income. It might seem small but start from somewhere. This is better than not saving at all. One day, you will look up and be proud of how far you’ve come.
- Prioritize Debt Repayment: Contact your debtors to see if they can negotiate better rates and flexible repayment terms. While it’s important to save, aggressively paying off your debt can provide significant relief.
- Consider debt avalanche (focusing on the highest interest debt first) so you don’t pay more than you budgeted for or debt snowball (focusing on the smallest debt first) methods.
- Reduce Non-Essential Spending: Identify areas where you can cut back on expenses.
- Self-Care: It’s essential to prioritize your well-being. Even with a tight budget, allocate a small amount for self-care. This could be a simple treat, like eating out in a restaurant once a month or buying yourself that cream you want. The world wouldn’t stop. Courtesy, HerVest, we are sending you a self-care kit and an all-expense spa treat. Please get in touch after reading this. Lots of love!
- Seek Support: Consider support groups or financial counselling for additional advice.
Got a question for Dara, then send it HERE. We look forward to hearing from you!
