Can you save N1 million from a N1.5 million per month salary?

This article was inspired by true events.

I returned back to the office from site late in the afternoon today. And when my colleague Wale sees me, we greet and chat for a while, then he says to everyone, "Hey, Paul is back; let's ask him what he thinks about what we were discussing earlier this morning". Wale is quite witty, funny and knowledgeable about things; so immediately, my attention is spiked.

Then, he asks me, "If you were being paid N1.5 million per month, would you be able to save upto N1 million every month?"

For a moment, I'm amused, and the response that comes out of my mouth is, "Why not N1.2 million every month instead?" There's a very silently loud pause across the room as everyone seems to have expected me to answer differently. And I'm like "Why do you have to spend as much as N500,000 every month on yourself? Are you dashing people the money?" Lol... And in the deeper part of my mind, I said "Don't you have a plan to scale up your financial capacity?"

I was really honest in asking everyone in the office (which already had pin-drop silence by now because of my answer) these questions because I couldn't fathom why a lot of young, mostly unmarried guys and a few newly-weds thought they needed to spend upto N500,000 in a month on upkeep and operational expenses if they earned upto N1.5 million monthly (which, by the way, is a far cry from what most of us actually earn).

Well, long story short, a large section of the room disagreed with my opinion, saying that whenever you begin to earn more, you'll also begin to have more expenses, and so will have to spend more. For example, if you used to send your parents N50k, you would want to double that once you started earning N1.5 million. Also, you probably won't have the time to do your laundry anymore, so you'll just take them to the dry cleaners. And here's where my humble self had to interrupt my other colleague Ayo who was saying these.

I said, "Couldn't you use your washing machine to do your laundry instead of taking them to the dry cleaners? Isn't that what washing machines are made for?" And another person replies, "How about ironing?" Again, I'm amused at his interjection, and I fully realize at this point that I was dealing with a dichotomy right there.

One fundamental factor that keeps the middle class in the middle class is the continuous lack of discipline to live below your means, plan above your means, work with a budget, and consistently invest in a well-designed scheme to scale up your financial capacity OVERTIME.

I fully agree that with a salary that is within the range of N100,000-N200,000 (which is what many middle class people earn), making substantial savings might be tough (not impossible though). But I also believe that regardless of whether you earn N100,000 or N1 million monthly, if you really want to save substantially, you will do it. Even if you're married, it all comes down to "Do you have a plan, and do you follow your plan?"

If you make irresponsible financial decisions, you will pay sooner than later. If you keep giving people money indiscriminately in the name of helping them (even when you know that you really can't afford it), one day, you'll be broke, and those same people you were "helping" will question you for once being in the place of means but not utilizing the proceeds to secure your personal future. Many of them will abandone you of course. Some might even mock you sef.

Fun fact: There are oil company and other highly paid employees today who earn as much as N3 to N5 million monthly, but still need to take a loan in order to by a N12 million vehicle.

The first time I heard of this happening was when I was doing my 6-months undergraduate internship, and a friend who was doing hers' at the time in an oil company told me. I remember feeling quite bewildered at the prospect of that actually happening. But as I've grown older, I find this to be the reality of many. In fact, I too have fallen into this trap on occasions. And by that, I have learnt a few lessons that I now want to share:

1. Realize the need to save and invest money. You really don't have to spend upto 50% of any of your earnings within a period of at least 1 month. This applies to both salary earning and other earnings. Truth is, you tend to pay less attention to what you do not understand its importance. So, understand the importance of saving and investing money: for tomorrow's security. The Bible says that "money is a defence". Anytime you need defence in life, it is not for was is past but for what is coming. 
2. In managing your personal finance, budgeting is key. And in budgeting, your first executive decision should be "to save some of the money from being spent within the period covered by the budget". For example, if you earn N100,000, you could decide not to spend N50k of that money within that month. Often times, when you postpone spending money, you'll end up not spending it eventually. Try this sometime. 
3. When you earn money, don't be in a rush to spend it on things. Let your mind chill a little bit and collect itself. Then you can be more articulate about the things you actually need to spend the money on.
4. Understand that the number one reason why you spend money is not because you have "pressing needs" (how ever true those needs may be). It's actually because the money is available, unbudgeted for, and you decided to spend it on those "pressing needs". If you had N200k in your bank account that you have not decided to save or to put into an investment or to solve a particular problem that is actually vital to your personal operations, you'll likely start wanting to use that money to change your TV set to a bigger one, or to buy a better phone, or to buy clothes, home decors, and properties that you really do not need.
5. Whenever you have some cash, your discipline is being tested. You didn't get that money so that you can use it to solve the whole world's problems or to buy everything that catches your fancy. Please watch Sam Adeyemi's advice about how to manage your money in the short video clip above. 
6. No matter how much you make, make it known to yourself that you don't have money. Actually, that is the truth. You don't have money. Some of the richest people around make use of Android phones. But you that makes N300k per month finds it necessary to use your entire salary for a month plus to buy an IPhone X. That is not smart. You don't have that money that you're spending. (You probably don't know this, but I hope you do now) 
7. You're not poor if you say you don't have money. That should be a visionary and pragmatic statement if you really know what you're doing. Let me repeat it again: If you're reading this and your bank account balance is N20 million, YOU DON'T HAVE MONEY. If you build a house with that money right now, you'll become broke. In fact, if you're not careful, you may not be able to finish building the house to taste, depending on the size and accessories of the house. Yes, you would start collecting rent and make your money back. But that's because the house is an asset. Imagine that you used it to buy a N12 million vehicle that would have a N3-N4 million secondhand value by next two years instead? Or some other liabilities. You don't have money until you have enough assets that guarantee that you can't be broke again. 
8. In personal finance, don't cut your coat according to your size. Cut your coat according to your material. Quit letting societal and peer pressures determine your spending. Understand that there's nothing wrong if you're the only one among your friends that uses an Android phone. You could also be the only one among them who can afford to pay for a N1 million emergency on the spot (this one is better than the IPhone). Appearances can be deceiving, and mostly are. Most young people fall into this trap. You don't have to look rich when you know you really aren't. There's no wisdom in that. 
9. Plan your way to financial capacity. It could be a two or three-year plan, but make it a realistic one and start working towards it with dedication. Just because you earn N1.5 million per month doesn't mean anything. That salary may cease to come tomorrow. If it does, have you built enough assets to maintain and scale up your standard of living yet? If you get a pay raise or start a new job, don't be too quick to increase the allowances you pay your dependants, at least for the first 6 months after. Allow your mind to readjust to your new earnings first before making any increments. This way, you'll be able to make only the necessary ones. 
10. If you've already made mistakes, don't worry, there's many of us on that train. I'll tell you what I usually tell myself: You can start again. Don't throw in the towel. It's never too late to give it another go. And it doesn't matter if you're still young, middle-aged, or more. All that matters is your willingness to turn around and put in the hardwork to get it right. And you will. 

Chukwubuikem Paul Anunaso is a civil/structural engineer in Lagos, Nigeria. He is also the editor of The Paul Anunaso Blog, and can be reached at anunaso.cp@gmail.com