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Hello OGs,

In the past couple of posts, we have been analyzing and strategizing about financial freedom, in this post we are going tactical. If one is serious about financial freedom, the element of budgeting cannot be overlooked. Budgeting needs self-discipline, it differentiates people that talk about financial freedom from people that get on that journey. It is the difference between paying for a gym membership and booking appointments with a trainer, setting out time in your daily routine to get on the treadmill, going for a 1-hour walk, and food prepping for the week. Budgeting is about determining how much to spend, duration (mostly monthly), prioritizing, allocating, and cutting. This is not easy because there are so many things competing for our very limited resources. But alas, what must be done, must be done.

So how then do we budget?

Fixed and variable expense.

First, separate your fixed expenses from variable expenses. Items like rent, food, essential clothing, utility bills, and loan repayment are fixed expenses; they are unchanging and cannot be underprioritized. While variable expenses like eating out, Netflix subscription, wardrobe upgrade, home improvement, essentially all other expense items that we can generally live without, will fall under variable expenses. It is important to differentiate as the strategies for prioritizing, cutting costs, and ascertaining the percentage of allocation are different for fixed and variable expenses.


In terms of prioritization, your fixed expenses come first. You must pay rent, feed well, and pay off loans. These items are essential to your living, so they must rank high on what is a priority to you. Next are the non-essentials, this is where it becomes individualistic, and you must decide what is most important, the degree of importance, and the frequency of need. So, one might decide that a wardrobe upgrade is important, but the frequency will be quarterly not monthly, or eating out could be fortnightly rather than daily. Building the prioritization framework around your expenses will help curtail impulse buying and ensure that your money is going where it is needed first and where it is wanted next.

Swinging the sword – cost-cutting

Next, we need to scrutinize all expenses. We must remember that the purpose of cost-cutting is to shrink expenses and live within the boundaries of our income after saving. The biggest issue I have seen with budgets is that people spend way more than they can afford on fixed expenses, and they feel like they cannot squeeze that expense bubble enough, so it is hopeless. Look, if you want financial freedom, you must make big decisions about where to live and the conditions that surround that. My rule of thumb for rent or mortgage in North America and Europe is that your rent should not be more than 30% of your monthly household income, and in Nigeria, your annual rent should not be more than your salary for two months. If it is more than that then you need to move or get a roommate. These are hard decisions that need to be made across all your expenses to ensure that you are living within your means and not digging yourself into a debt hole that you cannot recover from. I will dedicate another post to cost-cutting, so we can walk through each expense item and how to deal with them

Determine your percentage of giving going in.

Another big issue that I see with budgeting and staying within boundaries is our giving habits. I am a big believer in helping others and giving, but as my husband will say, it is easier to lift a bag of cement when you are standing than when on the floor (he has lots of construction analogies 🤣). It is about putting on your oxygen mask first, before helping someone else. So, determine from the get-go how much you are willing to give per month and if someone comes after you have reached that threshold, schedule them to the next month’s bucket. You also must decide on the people in your life that make up your emergency cohort; these are the people that you are willing to break your emergency funds for. Knowing this going in allows you to make quick decisions on giving, helping, and to what extent. I know this sounds mean and logical, with no emotional incline, but I promise you, having these framework helps, and if you deviate occasionally and help that friend in need, you know where the line is and figure out how to pull back into your boundaries later.

Minimum credit card payment

It is important to note here that paying the minimum payment on your credit card and using that to calculate your budget is a big NO. Do not rob Peter to pay Paul that comes back to hunt you hard. Wherever possible, please pay off your credit card amount due every month. A credit card is a tool to improve your credit score, every payment incurred on the card must be considered an expense. It is not a way to increase your income.

Wow, it’s a long post today. Lol… Sorry, OGs. Like, comment and subscribe 😊

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