Take a fresh look at your lifestyle.

Major money headaches and how to tackle them

Babajide Okeowo

If you’ve ever felt anxious about how you’re going to have extra cash for emergency purpose, constant headache on living from paycheck to paycheck and how to attain financial freedom, here’s some good news. If you face your money stressors head on – like these five common ones – they lose their power over you. And both your financial and physical health can benefit. Below are some money headaches and how to confront them.

Living paycheck to paycheck

The numbers paint a bleak picture: Many salary earners live paycheck to paycheck and don’t have anything saved for emergencies. In other words, many are just one paycheck or unexpected bill away from major financial disaster.

The simplest way to fight this paycheck-to-paycheck cycle is by creating a realistic spending plan that includes fixed and variable expenses, as well as long financial goals like having your own house. Making a budget is key; without that, there’s always a reason to be worried.

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Next, look for places to cut down on your expenses, no matter how small. Even painful moves like canceling your cable TV subscriptions, shopping with a list and buying only essential things are smart moves. If you save just N10, 000 from cutting down on your Internet subscription, TV subscription, etc., in a year, you would have saved N120, 000, in ten years you would have saved N1.2 million; think of what you can do with that money.

You can use that freed-up cash to build a safety net to address serious needs.

Emergency expenses

The pay-off line of a top insurance company says ‘Life Happens”. This is very true, at any point in time, you may get hit with unexpected expenses, but they’re not uncommon. Most of us will get hit with a big bill at some point in the year – whether it’s a car or home repair or a health issue. That’s one reason it’s so important to build up that emergency savings fund.

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Many people are walking around without one form of insurance or another. Having good insurance coverage can help mitigate the costs of an unexpected event. Property owners can do well by having insurance that can cover damage to your home, just make sure to read the fine print to see what is and isn’t covered. Car insurance can offset costs incurred in an accident or even theft.

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Having enough to retire on

Most people in private and even government establishment do not plan for their retirement. A time will definitely come when you will be asked to retire, voluntarily or involuntarily. When this situation happens, those who do not plan ahead for this landmark event are faced with a dilemma.

There are so many financial retirement products in the market today, familiarise yourself with them and do a painstaking study so you do not get cheated by Pension Fund Custodians, PFC.

And it’s okay to ease into the process, participate in Contributing Pension Schemes, CPS, and gradually build a nest, you may start by contributing a small percentage of your income at first. Just commit to gradually upping that percentage once or twice a year until you hit your target.

Investing and market volatility

You know that feeling when the market’s down, and all you want to do is panic – sell everything? There’s a scientific explanation for that. A University of Florida study found that cortisol, the stress hormone, makes us especially averse to taking risks. That may be why investors are tempted to sell when prices drop, locking in their losses, rather than holding on till the market rebounds.

The solution? Make smart investment choices now – not during a downturn – that lessens your risk. For example, selecting well-diversified index funds or exchange-traded funds (ETFs) is a relatively low-cost way to get exposure to hundreds of stocks and bonds at once. If certain investments are down, your portfolio is balanced out and, therefore, protected by others that aren’t.

And don’t forget: You’re in the market to build wealth over time – not to get rich quick. That usually doesn’t work, anyway