One of the days that virtually all salaried workers look forward to is undoubtedly Payday. The end of the month always puts smiles on the faces of workers as their bank accounts are finally credited. Bills can now be paid, fridges can be restocked, fuel tanks can be filled to the brim and long overdue debts can be settled. For the first few days after payday, we feel rich and then slowly that feeling diminishes as the days go by. More often than not, the last week of the month until payday is the hardest for many of us as we look for ways to survive until our bank accounts are credited once again and the vicious cycle continues.

According to a survey of more than 4,400 workers by CareerBuilder.com, 61% report that they always or usually live paycheck to paycheck to make ends meet. The interesting thing is that, most of these people will tell you the reason they live that way is because they do not make enough money. However, the real issue is not about how much money one earns, but rather how well one manages the money that he/she earns. This is what makes all the difference!

The year 2016 just started, making it a very good time to do things differently. Learning how to manage your monthly salary effectively has never been more important than it is today given the current tough economic conditions. For most individuals, knowing how to manage money better is one of the keys to achieving ones financial goals. If you want to get your finances under control, it’s never too late to start. What follows is a list of basic money management skills and tips you can start incorporating into your everyday life to enable you achieve financial freedom.

1. Draw Up a Budget

Budgeting your monthly spending can be one of the hardest habits to cultivate and maintain. Many people are often turned off by the simple term “Budget” as they associate it with restrictions and deprivation. Nevertheless, having a budget in place is essential to making sure you build a strong financial future. As the old adage goes, “You can’t manage what you don’t measure”. Hence to be able to have control of your finances, you need to know how much money you have and where that money is going.

The first step in writing up a budget is to critically study your income and expenditure. Start by writing down how much you earn. Make sure you include all sources of income such as: welfare benefits, employment bonuses, rental income or interest earned on savings and investments. The figure you write down should be the total amount you receive from all your income sources on a monthly basis. Then you need to figure out just how much you are spending every month. If you are like most people, your expenses will generally be categorized into fixed expenses (such as rent, electricity bills, school fees etc), living expenses (food, daily expenses) and impulse expenditure (this is where you spend on things like clothes, recharge cards and other items you mostly purchase on impulse and not really out of necessity).

Once you have summed up your monthly income and your monthly expenses, subtract the total expense from the total income to get the difference. A positive/surplus position indicates that you’re spending less than you earn, which is great. A negative/deficit position on the other hand indicates that your expenses are greater than your income and gives you an idea of where you need to trim expenses and by how much. If you are married, it is important to get the whole family involved in drawing up and, more importantly, sticking to your budget. Explain the bigger picture, so your family can see the future rewards for the sacrifices they make now. Remember to review your budget regularly – at least every other month and make changes where necessary.

2. Pay Yourself First

Paying yourself first simply means that you make it a habit to put money into your savings or investment account first as soon as you get paid, before you even have time to spend it on other things. When it comes to savings, just about everybody agrees that saving money is a good idea. However, just because it is a good idea does not necessarily mean many people follow an organized savings and investment plan. Many people have intentions to save and invest their money, but only relatively few actually act on these intentions forgetting that profits come from only one source: Investments.

To be able to pay yourself first, you need to work out your budget for each month ahead of time. Set up realistic goals based on your income and your expenses and decide exactly how much money you want to set aside for savings. One of the best ways to save money is to do so as soon as you are paid and to automate the process. The usual advice is 10% of what you make, but any amount that you can comfortably save is better than not saving at all. It is always easier to spend what is left over after saving than it is to save what is left after spending.


Don’t be afraid to start small. You can increase the amount you save as you begin to feel more confident in your plan and/or your income increases. Before you know it, your money will accumulate and you would have saved for things that are important to you. Whether you are saving for retirement or a vacation, this simple technique will help motivate and empower you to achieve all your financial goals.

3. Ban Yourself From Unnecessary Impulse Buying

Have you ever gone to the mall to do some grocery shopping and ended up with a whole new set of clothes in addition to your original shopping list? This is what is called Impulse Buying and we are all guilty of indulging in it at some point in time. We see it, we want it, and we buy it. The worst part is, we usually regret it. Not only can these purchases break our budget and put us into unnecessary debt, but they often make us feel very bad and remorseful.

Going out to buy anything and everything you see is a sure way to burn through your salary even before you are halfway through the month. While it is understandable that you may need to buy some fancy stuff once in a while, it is better such purchases are planned for and therefore accommodated in your budget for the month. Some other simple things you can do to greatly reduce impulse buying include:

  • Make a list and stick to it – Keep a list of items you need on your next trip to the shops, and follow it religiously. This will help you stick to the right aisles and stop you from getting distracted by carefully placed sales signs and displays.
  • Follow a mandatory waiting period – When you see something you would like to buy, rather than buying it on the spot, force yourself to think about it for at least a week. This will give you time to decide if the item is something you really need, or alternatively forget about it altogether.
  • Avoid shopping on pay-day – Most people feel richer on pay day, and are more vulnerable to frivolous purchases and spending. Try to wait a week before buying any big ticket items.

4. Learn To Say No To Money Requests

If you are perceived to earn a decent amount of money, you are most likely used to getting endless requests for money from friends and relatives. A few of your family or friends will always have this one pressing need they want you to help them solve financially.

While it is probably good to help friends and especially family members facing financial difficulties, that should definitely not be done at the detriment of your own financial future. If possible, you can have a particular percentage of your income set aside for family and friend purposes. It is from this allocation that you judiciously dip hands to give to family and close circle friends in need when you determine that their request is genuine.

Restrict your giving to a limit you set for yourself and ensure that any requests coming in beyond that limit is met with an apologetic face and genuine excuse of ‘Sorry, I do not have the money now. You know if I did I would have helped’.

4. Make Little Lifestyle Changes

Always bear in mind that every little amount counts and can make a difference. Keep your coins by putting them in a piggy bank. Avoid taking chartered taxis and join the trotro if possible. Pack your own lunch to work if you can. There are literally hundreds of ways you can save money. Try to stay focused and keep your eyes on the goal. Practice frugality in all things. Be very careful with every pesewa. Question every expenditure. Delay or defer every important buying decision for at least a week, if not a month. The longer you put off making a buying decision, the better your decision will be and the better deal you are likely to get. These little changes go a long way to help you avoid financial difficulties. Always remember that every big accomplishment is an accumulation of little accomplishments.

Ultimately, in conclusion your salary and how you manage it are some of the most important things in your life, since it influences where you live, what you drive, where you can go, and almost everything you do. Learning how to manage your salary the right way is an important step toward taking control of your life to ensure your financial well-being and your peace of mind. Therefore make a conscious effort to better manage your salary, by not putting off until tomorrow what you can do today. Do it now and you will surely be glad you did!

By:Nana Osae Addo-Dankwa (C.E.O) & Gifty Oye Adjei (Investment Analyst)

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