How You Should Budget


As promised, we’re going to tell you about a great way to handle your budget. If you paid attention to our last post and did as we asked, you should have a full list of everything you typically spend money on. As such, telling you about the 50-30-20 rule will be easier. While we would like to take credit for it, we didn’t create it; but we can attest to its efficacy.

So, back to your list. On your excel sheet create three buckets: one for needs; one for lifestyle; and one for savings. Now, you’re going to categorize the items on your list into these three buckets based on the following definitions:


Things that you simply cannot survive without such as housing, transportation, food, utilities, clothing, medication, commitments etc. These are items that are critical for you to live a normal, healthy life. Please be advised: N75k dates with your lover are not critical to your existence even if you are a baller and your lady is a slay queen.


Things that contribute to a healthy lifestyle such as social outings, shopping, gym subscriptions, club memberships, entertainment, etc. These are items that are nice to have even though you can survive without them. Understand that wants do not cover an extravagance such as an iPhone X on a N100k monthly salary.


While the word may seem self-explanatory, please note that this also includes debts. So, if you have mutual fund investments, debts owed, retirement savings accounts or targeted projects you’re saving for, put them all here.

Needs                             Wants                                      Savings

Rent                                John Wick 3                           Payday loan

Taxi to work/Fuel        Gym subscription                 Investment in FINT

Foodstuff                       DSTv                                 Holiday in January

PHCN bill                Groomsman/Bridesmaid package  Emergency fund

Airtime & data           Extra pair of black shoes  Family contribution

Of course, this list is not exhaustive, but it gives you a fair idea of what should obtain. Once this is done, you can now apply the rule of thumb that says 50% of your income should service needs, 30% should take care of wants, and 20% should cover savings. That means if you earn N170,000 every month, you should be spending N85,000 on your needs, N51,000 on your wants, and the remaining N34,000 on savings.

Granted, you may find that your needs far exceed N85,000, but therein lies the beauty of budgeting; you can see where things are going wrong and work to correct this. So maybe it’s your rent that’s eating the chunk of your needs, you either must move somewhere more affordable, find a roommate to split costs with, or find a way to earn more money.

Per wants, a little discipline will go a long way.

Issues with savings? Just focus on clearing up your debt without acquiring more so you can build savings gradually.


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