Financial-planning-for-women-2

The Women Lighthouse Podcast aims to inspire purpose-driven women to live their dreams by providing guidance and addressing various issues related to womanhood. In part two of the financial planning series, Mrs. Okorafor shares insights on effective spending and saving for women. She emphasizes the importance of understanding one's spending habits and making informed decisions. She encourages listeners to assess their expenses and cut down on unnecessary spending, suggesting that budgets can help prioritize expenses and identify areas where reductions can be made. Mrs. Okorafor also highlights the significance of involving the entire family in budgeting and teaching children about financial responsibility. Hello everyone, you are welcome to the Women Lighthouse Podcast. This is a community for purpose-driven women who desire to live their dreams and aspirations. Our mission is to inspire you to live your dreams one day at a time while serving as a beacon of hope and guidance. We will be addressing various issues related to womanhood. Join me as we explore our journey of life together. I am your host, Wime Hamilton. Welcome to part two of our podcast series on financial planning for women. We're going to be joining Mrs Okorafor again as she shares valuable insights and insights on how women can effectively spend and save their money. As we know, financial planning is an essential aspect of our lives and it's particularly important for us as women to take charge of our finances and make informed decisions. So whether you're just starting out on your financial journey or looking to enhance your existing financial plan, this episode has something for you. So let's dive in and learn more from Chioma Okorafor. How to spend your money. Money is meant to be spent to, my children will say, reach and divide. Money is meant to be spent, you know. And so I tell people, you know, when I have these trainings with people, you know, even in the public sector, they will say, ah, are you saying we should not spend our money? You know, ah, money is meant to be spent to, you know. So I tell them, I know it's okay, money is meant to be spent and that's why I'm telling you how to spend your money. I tell people that, you know, when COVID came, some people, I mean, some of us will say without vacation in the U.S., in the U.K., you know, outside, we cannot survive. COVID made us survive, you know. Everybody stayed indoors in their country, in their homes, you know, and people survived. So I give people an understanding that, ah, this is the amount I used to spend every year. Let me borrow myself some. And then the dollar that has increased has made it another whole story again. By the time you calculate what you should take your children, you, your children, your family out there, by the time you calculate it, then it's what you should take, what you take one person out now. So you borrow yourself some. So let's bring it home. I used to tell them that there are people that, ah, every day, there was a time that every day, if I don't take a bottle of Coke, cold chilled Coke, ah, ah, when the Coke is cold and you drink it, hmm, first bottle is not enough. Second bottle, maybe around third bottle, that's when you now start gauging that, ah, you're still drinking the Coke. I used to take like three or four bottles every day. Chilled one, I used to make sure that it's chilled. And some of us have those kind of, um, appetite, how would I put it, those kind of habits. You know, like if we don't do certain things, ah, you can't work. And so we spend money because of our mentality, because of something that we have talked about that we feel that we can't come out of it. If you don't have pepper soup, if you don't take fish every weekend, you know, there are certain things that, and it might not just be all of this, you know yourself, you know certain things that if you don't spend, you don't feel okay spending. There was a certain time that every Sunday, I must go to shop right with my children, spa with the children. Even if I don't know what to do. Even if I don't need anything, Sha entered that place. As in every Sunday. We look for, ah, there's meat in the house. You know what, let's even take this, let's go and take fish or let's go and buy, we must shop, buy something. Something has to be bought, something. So everybody knows that it's a ritual. It's not a ritual anymore. We have survived it. It's not a ritual. We have survived it. So my point is that it is time to look into your spending and ask yourself, what is it that I can't do without? DSTV in my house, who pays DSTV? DSTV is Christmas now. Christmas, who pays DSTV? DSTV calls us and says, we have a promo for you, dah, dah, dah, dah, dah, and we think about it. Or, apart from Christmas, um, summer, I mean August, anytime we're not traveling, that period, okay, you guys have fun, reliaries, holidays, and all that. Every other day, with smart TV, we are spending money on data. We now want to spend on DSTV. We now want to spend on, ah, ah. Start to put them pen and paper and start to cut it down. Cut it down. Cut it down. Cut it down. We have how many cars in the house? Sometimes, a whole month, we're using one car. Everybody, let's manage our time, space. We go out. What's your timeline? What's your timeline? We drop here. We drop here. We converge again. We come back. There's one in the other car, but any other day, we just decide. Boy, for a month, it's a decision. Because of the expenses for that month, we'll cut it down. I should have started with saying something to you before getting into this, and now one of the things I always tell people is, um, for people who have never done a budget, personal budget, family budget, we do it every year, a budget is important. The essence of that budget is to know where you're spending money. Where is that place you're spending money? A year can go. By the time you look at your bank account, you see that, ah-ah, did this money pass through my bank account? Yay. Really? What did I use it for? Is the second question that comes. Ah-ah. Really? You start to ask yourself questions. With a budget, what that helps you to know is that, oh, this amount of money comes in. This is the amount of money that goes out. And it's on that basis that you're able to know what is the expenses that I can do without. What are the expenses I can do without? It is on that budget my husband and I will be able to determine that we can do a project, we can take up a project this year, and we will meet it. Not because the money coming in is commensurate to the money going out. Mm-mm. Not because of the imbalance. Mm-mm. But because we are aware that this money coming in cannot even cater for the budget and the expenses. So we now know that we have to increase. You see these multiple streams of income. We have to find a way around it. It's very important that we have to start thinking about it. Why do you think that companies have strategies towards the end of the year to plan for the next year, have a budget for the year? To be able to say, oh, these are all the expenses we have. This is what we want to do. Which means there now has to be a target for everybody. And that's how targets are created. And so you see someone that says, my target is this. But some of our business, how many of our business have targets? Because it's on the basis of this is the project we want to do. This is what comes in every year from so-and-so. So based on this, we might not be able to meet all of our projects. So we have to set a target so that we can increase the number of client base. Also that we can increase our source of income. This is important. So that you don't think that. So that when the increment comes, you know what to channel it to. Some people want to do investments. Some people want to do this. Some people are asking all of these questions. When this thing comes in, what the budget does is to say, I know what to channel this in the order of priority. Otherwise, you start a project, you channel it into a project that you never complete by the end of the year. Meanwhile, you would have done two more that you would have completed, and they started this. I know that this one will take into next year. So what the budget helps you to do is to realign. And that's the first thing I would say to every one of us, to have a budget. And if you already have a budget, stick to it. Very important. Know where your expenses are. Know where your incomes are coming from. Oh, this is my income for now. Maybe reel about it. These are the things I have to spend. Break them down. It is at this point you now know that, ah, spending. Is this one necessary? I can cut down on this. I can cut down on this. I can cut down on this. Okay. I can do this one once a quarter. Or I can spend on this. You know, you're able to manage it and say, okay, so that means there's a reduction in the expenses that can meet certain things. So I can take away from here and put here. Okay. I can take away from here and invest. And then you know that, oh, it will not, I will not be disturbed to go and spend, to go and take it, you know, from that investment. So it's very important. I mean, I needed to have said this before I even started. That budgeting is important. And I guess you hear people say it, but it's important. As a family, have a budget. It's important to even let the children know the budget. My children know the budget. They know, when I say, no, we can't afford it, they know, in fact, they don't even need to start justifying or making speaking too much English. It's important that is done, the budget part. And that's where you know, and that's where I draw my advice regarding the spending. Cut down on the things that you spend. It's okay to spend them. Not a doubt. If they're as important as you say it is, then spread them out. Commit them quarterly. I find time to take my children out to say, okay, let's leave the house. Let's just go and stay somewhere. You know, but when there's a project, you say, I said, that luxury, we can't afford to do it. We might do it once in a year, but we can't afford to do it because X, Y, Z is what we have to do. And the children understand. No more, you know, weekend hangouts again. No more weekend outing all through the three, Friday, Saturday, Sunday, and come back on Sunday. Because X, Y, Z is, you know, there's a project. And so we have to cut down a lot of things. I said, it's even my DSTV. They repeat movies and repeat movies. There's Netflix. There's Prime TV. There's all of these things that you can get. And I'm asking myself, I'll pay for all of this. And I'll still pay for DSTV. I'll still pay for Netflix. I'll still spend them, pay for data. I had to borrow myself. We had to borrow ourselves then. And it might not just even be that. It might even be, you know, the, it might be a lot of things. The airtime, how you consume airtime. You ask yourself, is it cheaper to do it this way? I mean, how much airtime do I spend? If it's business you use it for, then yes, the business will cater for it. So we have to check our spending. I don't know what it is that you're heavy on spending. And it's important that, you know, you itemize these things. Itemize them and begin to put prices to them. And you're able to see the ones that you can cut off from, I mean, cut down on or spread out. And we're able to deal with that so that we can have, yeah, we can have something else. And the third quadrant will be on how to save and how to invest. How to save and how to invest. One of the things I would say to people is that start with saving. Saving is a culture. You have to build that culture. If you don't have that culture of saving, trust me, in three months' time, you will not see the results of your savings. Well, three months, that makes sense. Three months is fair enough. You won't see the results of your spending, of your savings, sorry. So build a culture. And how do you build a culture of saving? It's by saying, oh, what is it that I can really do without? Okay, can I put aside $1,000, $1,000 in this particular account, $1,000, $1,000, $1,000, and leave it for more than six months, and I don't – it's a culture. It's something that you – it's a habit. I don't tell people to go straight and start saving $100,000 when they've never saved $5,000. It's – I mean, it's dicey. Saving is a culture. It's a culture. And it's something that you start with amounts that you can do without. You grow. You see how much they've saved your life. When I say saved your life, that you never knew that you had some – ah, this is a rainy day, and you need that phone, and how you're able to use those phones to solve that problem without having to go out and knock on A or B's door or stop someone on the phone. You see that when you have tested it and you have seen it, you now say to yourself that it's time. Until then, you see that if you don't have that culture, the tendency to go back and use that money is there. Except you're doing an investment that you're locking down, like a fixed deposit or a bond you're buying or treasury bills you're buying. You can say, okay, I'm locking down treasury bills. I'm doing it three months. I'm doing it six months. And you can't come back and say, give me my money until that instrument matures. Or a bond you can do for one year or you're doing it for three years. You can't go back and say, you see what? I've changed my mind. That bond is locked down. Except you want to take that route to say, okay, I want to do a heavy one. If I don't put it here, this money will go down as quick as possible and I want to invest, I want to put it in a project. You can lock it down and say, okay, you know what? Let me go all out with a bond. Let me do a fixed deposit and then check the returns. To be honest with you, the returns on our instruments in Nigeria are not really that high. I don't think there's anyone that is above 18% as of now. I don't think there is anyone. But, I mean, it's something that we can't. I don't think there's anyone that is above 18% as of now. There used to be a time when our instrument money market time, when I started money market, was doing 25, 28. There were instruments here that were doing as high as that, even fixed deposits, you know what I mean. But the truth about this is that, one, we still tell people to invest. One, because it helps you to secure your money and it gives you a lot of returns on your funds that is more than what the bank will give you if you're just doing savings. You can't even compare the returns. It can't be compared. So the returns are not double. They're not double. Investments are not money doublers. It's important to know that. They're not money doublers. But what they will do for you is to secure your funds, especially if you're putting your funds in fixed income instruments. Fixed income instruments are instruments that, you know, even when the returns on investments go down, your money does not go down. What do I mean? So, for instance, you are earning, I'm using, for instance, a money market instrument, and I'm sure that a lot of us know what money market is. Money market is a pool of funds. So they will collect Patricia's funds, Seymour's funds, they will collect Lilian's funds, everybody's funds, Dan Gauthier's funds, everybody put them together, you know, in a pool of funds. And then use it to now buy instruments like treasury bills, bonds. So we buy several instruments, fixed income instruments together, and then give you returns on those instruments based on what you have put in. Now, why is it very good? Because now, for instance, Patricia brings $50,000, Seymour brings $100,000, Dan Gauthier brings a million. What do I have now as an investor, me as a fund manager? I have like one point something, as against when I'm investing for Patricia alone. So I'm investing one point something. So the bargaining power I would have is much more than when I'm just investing for only Patricia. And that's why money market is doing a lot better than when you go to buy treasury bills alone or go to buy bonds alone. It's doing much higher in returns. However, for the money market, it's a different ballgame because you can have access to it after one month. But for a treasury bill, it is locked down. It's individualized. It's you buying it, but it's locked down. The same thing with a bond. It's locked down for the period of the 10-hour issue. So this is what a goal is. When you're investing, you have to have a goal. Investment goal is what drives you to keep going and keep pushing and keep putting in. You can either do a one-off, or you can say, okay, every month, I want to take every month, I want to be putting this amount. Every month, I want to do that for a money market. But like I said, for a treasury bill or a bond, it's locked down. You can just say, okay, I have $10 million, and I just want to put it, and I want to lock it somewhere that I don't want to have access to it. Please, what are the rates for treasury bills or money market? And you lock it. However, there are people who are aggressive, people who want to, you know, who don't mind the challenges. And, okay, I was explaining something. I said, which returns on investment for something like a money market. Just not to say, we're just talking about money market. There are funds that we call like Sharia funds. There's the guarantee funds. Those ones, you can break them down. So we know, I mean, most of us know what the Sharia funds is all about. The investment is done on only ethical goods, things that are not – how would I put it now? Things like cigar, drinks, alcohol, investments are not done on that. But we also have the money market Sharia fund. We have that. So for the money market Sharia fund, it's done on interest rates. Those ones, you can then become, if you're interested. But most times, what people go for, apart from people who have religion bias, is usually the money market itself. You can also have the dollar money market. You can say, I don't want to invest in Naira. I'm not sure how our Naira is going. I want to open a dollar money market. And that one, you can also deal. And your returns also will be in dollars. However, there are also terms and conditions. When I say terms and conditions, you cannot just take dollar and put it in a bank. And so for SEC, it has to be a third-party transaction. Maybe third-party transactions, for instance, your salary is being paid in dollars. So there's a source. A company is paying it. Or your brother or your sister sent you money. There's a source for that dollar. So you can't go and buy dollar. The SEC is very careful about what they call this thing now, money laundering and fraud. So you can't just go and buy dollar and put it in the account and do a money market investment, dollar money market. No, no. It won't be accepted. What you do, there has to be a third-party transaction where a source has been determined. And then from that source, they're not able to invest for you in dollar funds. Those are just the terms and conditions around dollar funds. Yeah. There's also the euro bonds. For people who just want to say, you know, our exchange rate is really not how I – I just want to – I don't want to do Naira. Those instruments are there. For the money market, I would say that, for instance, if the money market is ending 25 percent, if you say – if money market is ending 25 percent, that's on the funds that you have placed in. So if you have placed a – if money market is doing 25 percent, sorry, now, you start to end 25 percent. When – if money market goes down to 15 percent, the returns that you have earned on that 25 percent still remains. Going forward, you start to end on 15 percent. So it does not go down. It's not like the variable income, like shares and all of that, that once it goes down from 25 to 15, you lose everything and it goes down. So for the money market, you start to end on that 15. But your 25 percent returns, all the returns that you have gained while it was on 25 percent is still there in your portfolio. If it goes down again to 11 percent, the 25 percent and the 15 percent is still in your portfolio. You now start to end on 11. If it comes up again, you know, just like that. So there's no – you're losing anything from there. And that's why a lot of people go for fixed income instruments, you know, because despite the fluctuation, your funds are still intact. But for a variable income, for shares, you get – you always get higher than returns. You get higher interest than you would get in the variable than in the fixed income. You always get higher interest. However, the risk is attached to it. So if you're a risk taker and you want more money within a short time, the variable income is there for you. However, I always tell people, if you really want to go into the variable income, it's important that you enter it as a stock. I mean, you buy stocks. You get a stockbroker and buy stocks. Buy stocks so that those people have an oversight and an overview of what is happening in the industry, and they can tell you when to plug out and plug in. Because it benefits them. They have also a percentage that comes in for them. So they manage the growth of that stock, and why you don't have to wait and sit and sit and know nothing, what is happening about the shares, till one day somebody says the company has crashed. So I always suggest to people that have a stockbroker that will manage the funds, and a reputable stockbroker manage the funds. They have their own percentage, so they know the importance of making profit for you. So when a company or they hear the gist of a company is going down, they quickly tell you sell. They have those firsthand information, and it's very important. Yeah, so I think that's on saving and investing. Like I said, very important that we start with what we can let go of. Very important. I hope this episode has been informative and helpful in your financial planning journey. Remember, the key to achieving financial security is to make informed decisions and take control of your financial situation. Thank you for tuning in, and we look forward to bringing you valuable insights and tips on our next episode as we continue to look into financial planning for women. Thank you for listening to today's episode of the Women Lighthouse Podcast. I hope you were inspired to keep taking steps towards living out your dreams. If you enjoyed this episode, we encourage you to share it with other women and leave us a review on our social media platform, which is in the description box. Also, feel free to subscribe to our channel to get notified of new episodes. Till I come your way on our next episode, keep living, keep dreaming. Bye for now.