From "Detty" to "empty": How to stretch your finances through a long January 2020 until the next credit alert

Via Getty images: Nigerian pockets are stretched going into 2020
  • "Detty December" is over and Nigerian pockets are gearing up for a lean January
  • Salaries were last paid on December 20th and the 23rd before Christmas holidays
  • After spending on Christmas gifts and concerts, there is little left over until January 31st
  • Business Insider SSA looked at some techniques to stretch your finances

Despite slow economic growth in 2019, December was one party after party after another

For many Nigerians, December 2019 was a much needed excuse to blow off steam after a long year. Unfortunately, a lot of people blew off more than steam and included their December paychecks. With companies paying salaries before Christmas, spending was allocated to buying gifts and attending concerts. Attending concerts meant paying for tickets, transportation, food, and drinks. Throw in New Year's eve celebrations and a healthy number of people are facing a long month of January with little to nothing left in the bank. If you're one of those people in that tough financial spot, we've got some tips to help you and your purse strings stretch until payday in January.

Companies should consider splitting monthly salaries in two

This tip is about looking ahead to the rest of the year and helping Nigerians control their spending. By splitting salaries in half and paying each half at different times each month, employees would be forced into managing whichever half arrives first. This would come particularly handy before the festive period. Still, financial responsibility comes into play, as was expressed below.

The counterpoint is; be it a lump sump once a month or split in two, if there is no financial responsibility, the employee will still find herself scraping the bottom of her purse not long after receiving her income.

Be financially responsible

There is life after December. Your bills are still waiting for you in the new year. A number of people took the "yolo" ("You only live once") route in the last month of 2019 and spent their hard earned money with a carefree attitude. That was not a prudent approach to spending. Once your credit alert is received from work, subtract all your bills first. Christmas gifts and concerts are not part of your bills so they do not get an immediate allocation. After subtracting your bills, you should split what's left in half. Savings and investments should be allocated half while the rest can be spent on satisfying your spendthrift cravings. To illustrate:

Salary: N150,000

Subtract bills: N80,000

Remainder: N70,000

Split in half: N35,000

The above is just an example. We understand that life happens and throws you curve balls. So what if you only have N25,000 to your name between now and the end of January?

Divide what you have left by the remaining days in the month

Today is January 2nd, 2020. Assuming you are paid on the last day of the month, that leaves you with 29 days until your next life-saving credit alert. With only N25,000 to your name, it is best to allocate those funds to the rest of the month.

N25,000 divided by 29 days = N862 per day

That's not a lot of money to utilize daily but you will have to find a way to make it work. The two most important things you will have to ration are transportation costs to work and feeding. If you have a car, you're going to have allocate a portion of what's left to fuel. You better also hope no car trouble that could wipe out what's left of your money pops up. If you don't own a car and your company has a bus that picks you up and drops you off at home, you are in a good situation. If you don't have that, then carpool with colleagues that live around you or use your route to the office. If you don't have anyone going your way, you'll have to manage N431 daily for public transport (splitting the N862 in half) while the other N431 goes to food. Preparing food at home will go a long way in saving the little you have until the end of the month. Cooking food at home will also allow you to allocate more to transportation if it costs more than N431 daily.

If all else fails, borrow

If you are in a really tight spot, borrow funds from family or close friends or colleagues. We recommend borrowing from close colleagues and tying the repayment to your next payday. That way, you're most likely to pay the debt back as opposed to a family member or close friend who might let you slack off. However, if your close colleague also happens to be in the same financial pickle as you then you will have to reach out to family or friends.

If you prefer not to ask family and friends, there are a number of Fintech companies that are into lending. You can access funds from them via an app and have money credited to your phone within minutes. Keep in mind that you will have to provide personal details like your BVN and other information. Also keep in mind that if you are borrowing for the first time, the Fintech company is taking a risk on you and might not be able to lend you more than N5,000 to N10,000 to start. It could be more, depending on your risk profile. Fintech companies that are into lending will ask for your phone number and go through your text messages to see how much is paid into your account monthly. If that makes you uncomfortable, then you can choose not to complete the loan application. Do keep in mind that building a credit good credit history with lending firms is never a bad thing.

Don't borrow more than you need

Whether it's family, or friends, or a Fintech firm, don't borrow more than you need to get you through to the end of the month. The amount you borrow is what will have to be paid back when your January salary comes in. Just use the essentials, transportation and feeding, to gauge how much you need. Once you make it to payday, pay off your debt immediately.

Do you have any tips we didn't mention for getting through this lean January with stretched finances? Let us know.

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