Reason Why I Went Broke.

When You I Had It Good

When it comes to living the good life, what we desire and what we can afford do not always agree. Now I am not a professional in the field of money management nor am I a specialist business consultant that can point you where the money is, but, I have lived enough and made enough financial mistakes to know that it doesn’t really take a professional to know how not to go broke.

But, what better teacher than experience itself? When you have been burned severally by your decisions, you can almost give an accurate forecast when such issues are discussed. I had been reduced to ground zero in the past for my uneducated financial risks and investments.

Many times, I had dabbled into things I didn’t understand enough to dabble into and it cost me, some other times it is just my sheer wastefulness.

The ability to make sound financial decisions is a skill, you are either lucky enough to learn it early in life and not been burnt (through mentorship/reading) or you learn them later in life through being burnt (Personal experience).

 A lot of things contribute to our financial stagnation in life, some of them we knowingly indulge in, some of them we are totally ignorant of.

 Stick with me while I walk you through some of these things, and quite unfortunately these are the things I experienced firsthand, because I wasn’t privileged to learn them early, so I had to learn them through my own personal experience. (By force)

I Had No Money Management Skills.

Many of our financial shortcomings come under this heading, not all of them though. But, some of them are also big enough menace to have a heading of their own. I was making a lot of money at one time, but because my expenses weren’t tracked and structured, I was bleeding money on many fronts.

I was making money from one source (another item we will talk about) and it was going out in many different ways, I was practically bleeding money from many pores without evening knowing it. I was supporting my family, running my business, giving myself a good time every now and then, shopping, paying rent...I mean there were just many outlets and you'd think my business was generating tons of cash. Nope, it wasn’t. Although it was the kind of business that made sure I had cash in hands all day long, not all of them were expendable but did I even know?

 I didn’t know I was supposed to calculate what my monthly net was and structure my expenses in line with it. You know, how much to (or whether to spend at all) spend on things after spending on other important things. You know like Savings, rent, electricity, food, gas etc. I just spent as it came (a fool and his money...)

 Do you structure your finances by what is important and spend accordingly or do you just spend on everything in your path assuming they are all equally important?

 Impulse Shopping

Because I always had cash in my hands, I always felt spending a tiny bit on frivolities wouldn’t hurt (It always hurts). I'd go to the mall for a 1kg item, and I'd come out with receipt for a 15kg item purchase instead. (LOL) I thought I was that rich. If I only I always had a list of items I came to the mall for, I wouldn’t be throwing everything into my cart like a damn fool. Impulse shopping has a psychological bearing and needs some kind of discipline to ward off.

 I Lived Above My Means

This is such a silent killer that you'd have to be financially literate to understand whether you are living below, within or above your means. When I hadn’t learnt the ways of money, I could make 10 pages of money per month and 8 pages would go straight into expenses, some of them needless.

I expended before I even thought about saving. With the kind of money I was making, I had no business living in the kind of house I was living in, rent alone would take 5.5 of my 10 pages, then the other 4.5 is scattered amongst other waiting hands.

I wasn’t bothered, as long as the money was coming consistently, I thought everything would eventually work themselves out (How wrong could you be with money). I was certainly not living within my means, I was in a vicious cycle of almost hand to mouth living and I didnt know it because the business was still bringing forth fruit, enough to keep the cycle going.

Do not live to please, let your lifestyle reflect your income

One Source Of Income

Expenses burdened me so much because I had that just one business, everything revolved around it and life was practically being sucked out of it. I was so engulfed in that one business that I didn’t even think about diversifying, I didn’t consider other streams of income. I learnt the hard way when my business eventually came crashing. I had grown it big and stable enough to pursue something else to support it. I didn’t and when it started suffering, I too started suffering because I was practically feeding off of it.

I Didnt Save For Rainy Days

How would you have a source of income, a business and not save? Why would you expend the whole money that comes into your purse.

Well, that’s exactly what I did, thought the business would always be there, I thought that money was going to be coming in non-stop. When the business was eventually begging for injection of cash from outside, to give it a much needed boost, there was no money to inject. The rainy days were here and there was nothing planned for it. I eventually sold my business when I could no longer sustain it, I sold it, paid off debts with half of it. I practically hit rock bottom.

Take-Away From My Rants

·         If you weren’t privileged to be taught about money, learn and read about money, be financially literate, because only then would you learn to make money and keep it.

·         Dont live to impress, live within your means.

·         Learn to invest your money when you start making some.

·         Avoid impulse shopping, when you want to go to the mall, write down everything you intend to buy and the approximate amount the items on the list would cost, and then go along with cash slightly above that amount.

·         Make sure your monthly rent doesn’t cost at least half of your monthly income

·         Diversify and invest in other businesses. Multiple streams of income is one of the surest ways to make sure you don’t ever go broke.

·         Save, save and save. Learn to save a certain percentage of your income before expenses. Save and prepare yourself for the rainy days.