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Financial Literacy Concepts and Terms not Popular in Nigeria

 

Financial literacy terms and financial literacy concepts
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With the increase in the number of individuals wanting to be more money conscious and financially savvy. It is not surprising that Financial literacy is becoming a sought after knowledge in Nigeria. Everyone wants to understand what money management is all about and how it can help them grow their wealth. For a fact, financial education is the key to wealth and every Nigerian that I know would want to learn anything that will bring them more money.


So today we will be looking at some financial literacy terms everyone should be familiar with and financial literacy concepts we can practice.


Financial Literacy Terms Known In Nigeria

Financial terms are not different in Nigeria compared to the rest world. These terms mean the same thing any day, any time and anywhere. So let’s know them and include them in our vocabulary. 

Asset 

An asset is any resource that holds value. It keeps appreciating and rarely depreciate as time goes on. In other words, assets contain a value that can be converted into money. Any individual can have assets including businesses and countries. Assets are things such as money(bonds), house, land, investments and technology.

Bankruptcy

Bankruptcy is a legal status that a person or entity enters when they are unable to pay back their debt. In other words, when someone keeps taking debt they cannot repay they are most likely going to be bankrupt.

Budget

A budget is a plan to track how much income is received and allocate this income to different expenditures. This plan is basically for a one month period.

Credit

Credit is an agreement for money to be borrowed for purchase and paid back at a later day. Credit allows you to make a purchase you cannot afford at that specific time. 

Debt 

In simple words, debt is the money a borrower owes a lender. It is getting a loan from a friend or a bank and you are yet to return it. Then you are in debt. 

Income 

Income is what we always refer to here in Nigeria as a salary, even though a salary is an income is not a salary. Income is the money you earn through employment, investments or business transactions. 

Interest

Interest is a percentage on a loan that a lender charges the borrower.

Needs vs. Wants

On your journey to financial stability, it is always important to know what are your wants and needs. Needs are your necessary expenses bills like rent, utility, food, water and health. A want is simply what is not a basic need. 


Financial Literacy Concepts Not Known In Nigeria

Unlike financial terms, financial literacy concepts are things you can practice. They are financial activities that will change your life for the better. So here are some simple concepts you can try no matter what part of Nigeria you live in as long as you are reading this information right now.

Personal finance

Finance is a term for management, creation and study of money. Hence, personal finance is when an individual manage, create and studies money for their personal benefit. 

How to practice personal finance

  • Manage your money by doing things like budgeting, tracking your expenses and living below your means.

  • Create more money for yourself by starting a side hustle, having high paying part-time jobs if you come across one here, and starting a business.

  • Be financial literate by understanding how money works in this country. Know monetary policies that affect you directly as a Nigerian.

  • Invest your money wisely.

  • Learn effective ways of saving money.

Frugal living

Frugal living is adopting a lifestyle of living below your means. Living according to or within your means is a good thing. However, if you want to be frugal you must practice living below your means. It is simple and I’ll show you how. But before then let’s look at the importance and disadvantages of frugal living if there are any.


Merits of frugal living

  • You become accountable for your expenses 

  • Living when the economy is getting bad is easy for you

  • Saving money becomes easy for you

  • You won’t run out of cash

  • Growing wealth becomes possible and achievable within a short period of time

Demerit of frugal living 

  • You can easily become a cheapskate. Which means you mise money too much. And there are things you can’t be cheap about. Things like your health.

How to live frugally in Nigeria

Adopting frugal living is not a permanent lifestyle. It is usually the kind of lifestyle you adopt while trying to get your feet off the ground financially. So here are some frugal living tips you can easily practice in Nigeria.

  • Cut down electricity bills by minimizing its use during the day. Off light during the day and use natural sunlight. Even at night off the lights in the room, you are currently not using

  • When you go shopping for household items you don’t have to go for popular brands. Day by Day petroleum jelly will serve you just like blue seal vaseline. But if you want to argue quality then perhaps you have no intention of living frugally. 

  • Buy the things you consume a lot in bulk. 

  • It’s okay if you wait for things to be on sale before you make a purchase.

  • Fairly used items should be considered by you. Things like second new clothes what we call bend down select, shoes and even kitchen appliances. 

  • Always go for affordable options. Like a 10k something maybe be okay, especially if within your means but going for an 8k option is not a bad thing either. 

  • Save money. Being frugal without saving money is useless.

No-spend challenge

As the name implies a no-spend challenge means to not spend money. Where you go a whole day or a week without spending money. The idea is to not spend money on certain things for a period of time. I am sure you are wondering how is that even possible. Well, don’t worry I’ll show you how to do a no-spend challenge in Nigeria. But before then let’s see why it is important to give it a try. 

Importance of a no-spend challenge

  • It helps you manage your money

  • You get to track your expenses

  • The challenge helps you save money

How to do a no-spend challenge in Nigeria

We have a little idea of what the no-spend challenge is all about. While you can do it in a way that you go a whole day without spending money. Another way is to not spend money on certain things. These instances will help you have a successful no-spend challenge.

  • Identify what type of challenge you want to try. If it’s a whole day no spend great. If it is a no-spend on certain things fine.

  • If you are going to do a whole day. Then you might want to pick a day you won’t go out. If you have a car that has fuel already fine. 

  • On that day you won’t be buying anything extra. You eat what you already have in the house and you don’t spend on wants.

  • The easiest type of challenge to do is the no-spend on certain things and this is how it works.

  • You find yourself drinking coca-cola every day because you love it. There is no meal you have that doesn’t go with it. This means you spend at least 100 naira every day on coke.

  • Do a whole week of not drinking coke and save that 100 naira or more. 

  • By the end of the week, you have saved at least 700 naira.

  • Now replicate this on that thing you consume every day that is not a need but a want that has become a mini addiction. 

For me it’s biscuits and I can’t help myself. But anytime I try a no-spend challenge for it I always end up having more money by the end of the week. 

Emergency Fund

An emergency fund is money you save specifically for when an emergency comes up. It is like any other saving money but with the plan of not using it anytime soon. As a matter of fact, you don’t know when you will use it and you have no intention of using it any time soon.


The aim is to grow the fund into a big amount of money so you can be able to solve emergency issues no matter how big the cost is. 


We never pray for the worst to happen. However, it is life and unforeseeable things could happen. Anything valuable could get stollen, accidents could happen, an emergency health issue could come up. Which an emergency fund will take care of it.

How to start an Emergency Fund

An emergency fund is saved money. Hence, how to start one is by saving money. Open a savings account with your current bank or another bank and automate the saving process. So that no matter the circumstances you would be building a steady emergency fund.  


Another way to build an emergency fund that is not common in Nigeria is through insurance. Ask your bank if they do have an insurance plan and how you can benefit from it. Another good news is some health companies are starting to give health insurance. 


Financial planning

Financial planning is what you do in the process of making a financial plan or setting your financial goals. It is a step-by-step process of achieving your financial goals and being in control of your money. Or bets said being in control of your finances. 


How to make a financial plan

Even in Nigeria, this process is simple, let’s see how to make a financial plan.

  • First, have a financial goal or set a financial goal. You might have more than one. Start with the one that needs to be achieved first.

  • Track your money and redirect it to your goals. If you are managing your money properly but not directing it towards your goals. Then you are not ready to win financially.

  • It’s in your capacity to make sure an emergency doesn’t become a disaster as long as you take building an emergency fund seriously. 

  • Pay off debt. Living with debt is bondage. So in any financial plan, you make settling your debt must be a priority. Also, living debt-free should be a goal.

  • Saving money is good but doing it from your regular paycheck might not get enough saved for you. You can try to make legit investments and channel your profit towards saving.


Budgeting

Budgeting is the act of creating or writing a budget. It is a written down financial plan on how to use income that you are expecting to earn and what expenses you plan on using your money for.

Importance of Budgeting

  • It helps you achieve your financial goals 

  • Budgeting makes managing your salary easy

  • When you budget the chances of you growing your wealth increase.

How to write a Budget

In a detailed post here on My Nigerian Voice, I’ve written a detailed beginner's guide on how to write a budget. If it is something you are considering learning please go ahead and read it.

Debt-free living

Debt-free living simply means living without debt. As it is currently in the country, I wonder how many Nigerians can boldly say they are living without debt. We live a life that makes it easy for us to borrow money from friends and there are business owners always willing a ready to give us things on credit.


This alone makes an average Nigerian be in one debt or another. With our crashing economy life is getting harder for a lot of individuals and families. Hence, not surprised to see people being in debt to provide for their daily needs. It is not a nice thing to talk about but it is our reality. However, living debt-free is possible. 

How to live debt-free

These simple lifestyle hacks will show you exactly how to live without debt.

  • Pay off debt first. That is the number one way to start living without debt.

  • Live within your means, below your means or adopt frugal living. Don’t live a fake life trying to impress people. 

  • Always save money

  • Let your emergency funds be for emergencies only.

  • Be disciplined with money and be accountable for your expenses. 

Money management 

The financial literacy concept of money management is the process of budgeting, saving, investing, spending and overseeing the money usage of an individual or group of people.


Money management means being in control of your financial resources. Knowing what to do and what not to do with your money.

How to manage your money 

A random list of all the things you can do to manage your money

  • Track your spending

  • Make a realistic budget monthly

  • Always shop with a list

  • Live within your means

  • Stop overspending

  • Do away with bad money habits

  • Understand how money works

  • Have a financial plan

  • Set financial goals 

  • Save money

Pay yourself first 

Pay yourself financial concept simply means to save money. When you receive, your salary or income and the first thing you do after tithing is to save some percentage of your income. You literally just paid yourself first.


Make it a habit to always pay yourself first and trust me you won’t regret it. The fact is, there are no disadvantages to saving money. The idea is if you save today you have money for tomorrow. 

In conclusion 

Financial literacy concepts are things we should be familiar with and begin to practice in our everyday life. The economy is not getting better in Nigeria. Hence, it is our responsibility to make do with the finances we already have.


While working on yourself as an individual financial literacy is not about knowing words or terms to use but also things to practice that can make life easy. 


I am excited about every concept and I try my best to practice them. Which one are you excited to give I try to. Drop a comment and let me know.

Financial litereacy concepts and terms not popular in Nigeria






Financial literacy and financial concepts not popular in Nigeria. Financial concepts every Nigerian should know.

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