More than five out of 7 middle class Nigerians do not have a personal balance sheet. What is a Balance Sheet (PBS)?

One of the best advice I ever got was to have a personal balance sheet. This includes a list of all (mostly liquid and tangible) assets, and a list of all my liabilities, ergo, my net worth. I started keeping a PBS in 2011 – I had just changed careers to finance – and it mostly consisted of a few thousand Naira in cash, treasury bills, mutual funds, and some stocks. Six years and a depreciating Naira later, the net worth on the same balance sheet is somewhere between $XX,000 and $XX,000 (depending on which N/$ rate I use to convert). The point here is that one can (a) consciously be aware of their existing assets (b) deliberately take steps towards growing their assets, and reducing their liabilities so that (c) the path to becoming rich and/or wealthy is more definitive.

Here’s a link to the simple worksheet I use; I have also included a non-exhaustive list of assets one can include. The point really is to include only things that you can easily convert to cash.

Budgeting: Budgeting is an elementary school math problem, how to spend $5 dollars between chocolate and cookies. There is only one rule, “spend less than you earn”. Here’s a quick short cut to


  1. “Who moved my Cheese?” You need to know where your money is going. Literally. It’s like an MRI of your expenses, to determine what your money. This should take somewhere between 4 – 6 weeks. You don’t have to be very granular, you can have five to seven sub-categories to make it neat e.g. Feeding, Transportation, Housekeep, Enjoyment, and Miscellaneous.
  2. Plan: Now that you realized that you’ve been spending too much on say Enjoyment, you can now set a limit (monthly or annually) and keep track of your Enjoyment spending. This encourages you to be more deliberate and reduces the number of spontaneous Friday outings (expenses) that you incure.
  3. Install “Drunk-Mode” Apps: These are apps that prevent you from texting your ex when you are drunk. So, I’ve used it here, as it would prevent you from derailing from your plan. Every time you have an inkling for spontaneous spending, it’s a safe-mode that prompts you “Go home, you are drunk”. Basically, you need to hide your money from yourself. And it’s easy to do this. You can open an account with specific “Emergency Only” withdrawals. Or opening an account with Unity Bank that you can only withdraw from over the counter. You may also set up direct debits from your salary account into these drunk-mode accounts.
  4. Repeat 2 & 3: It’s a continuous process to track your spending. Pay with your debit/credit card as much as possible, that way, you can easily review statements monthly and not have to scratch your head trying to remember what you spent money on.
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Set a savings goals – as a percentage of your salary. Be religious about it. I have come across several savings/budgeting tips so I will share a few here:


* Pay Yourself First: Always best to automatically pay yourself. If your salary comes on a specific day every month, set up a direct debit. Decide how much of each paycheck you want to save – 5%, 10% or 20% – and set up a direct debit from your current account to a brokerage or savings account. When it comes to saving, forget about agency. Because really the only thing sweeter than receiving money is spending money.

* Mindful Spending: I am an Ijebu boy so maybe this came naturally to me. With almost every discretionary purchase I ask myself “Do I really need this?”; “what is my marginal utility from this purchase?”; “Can I live without it?”. Personally, I never go to the grocery store. At the store, I always mentally calculate price per kg – I will buy Dano that is N850 for 350g over Peak is N700 for 300g

* Carry only as much cash as you need.

* Mo’ money, mo’ savings: I know a famous poet, Chris G. Wallace said, “more money more problems” and we have gone with it for a long time. So, every time we experienced an increase in salary, or a bonus or unexpected income, somehow expenses “arise” from nowhere to catch up with the income increase. Consciously plan for the bulk of unexpected income to go towards your savings.

* TREAT YOURSELF: Always remember, the only thing sweeter than receiving money, is spending it. Treat yourself. When you achieve a major financial goal, reward yourself and go and eat boneless fish.

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Credit: nairametrics

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