Often times, many bankers would have common phrases such as “ I am broke “, I have no money” in the second or third week after payday. This can lead to stress and impact their ability to focus. Having worked for a commercial bank for a period of three (3) years, here is my collection of why most bankers are broke in the second or third week after payday?
1. IMPROPER FINANCIAL PLANNING
Based on my estimate, an average banker in The Gambia earns GMD12,000 net pay per month. However, the majority of bankers do not have a personal expense budget for a period covering to the next payday, as a result, most of them spend as they go. The effect of this no planning is that they tend to spend on unplanned items too. Maintaining a budget covering a 30 days period is key and ensuring this is monitored and adhered to may be helpful in attaining personal financial success.
2. INTERNAL LOANS
Many bankers have access to internal low rate loans. Some people believe bankers have about 33% of their earnings into debt servicing. Having to spend 33% of your earnings as debt funding, will result in 67% as take home. With this 67% take home, all expenses for the period would be made from here. Therefore, the principle of saving 30% of earnings may not be possible. You may consider reducing loans in your personal financial statements hence this could help grow your financial success. (continue below).
3. SOCIETAL MISCONCEPTION
The society has already built a conception that “bankers are the ones having money”. This may be accurate at some level but truthfully, bankers are only custodians of depositors’ fund. This sometimes triggers some bankers to spend money in the midst of such a society in order to maintain the societal conception a reality. As a result, this forces bankers to spend beyond the limit for a period before the next payday.
4. TIME CONSTRAINS
Working as a banker requires a lot of commitment, dedication and discipline with regards to time management a lot more. As a result, most bankers only survive on the banking job as their only source of income. The salary they earned is the only source of income. On the other hand, they want to maintain expensive clothes, suits, partying and fish money. Having to look for an additional side income-generating activity would help grow your financial strength as a banker.
5. PETTY LOANS
It has almost become a norm in The Gambia where petty traders would walk into offices with a display of their products on sales but usually on credit basis. Here; most bankers would be availed with these products and payment is usually done by month-end. Therefore, this creates an outflow avenue and thus given an opportunity low free cash flows after paying all debts.
5. PEER INFLUENCE
Just like any other institution, bankers often look up to peers or even mentors in terms of dress code, the vehicle type to drive, food choice and lot more, and notably, these things often result to a lot of financial burden on salary. Peer groups, mentors in the issues raised above are not bad at all but care and prudential financial behaviour is required.
Having identified these five possible reasons on why most bankers are broke before the next payday, bankers and non-bankers should have a cognizant approach in regards to financial success particularly young bankers.
Written by: Momodou S. Fatty | CPA, ACCA Finalist
Blogger | Accountant