On Financial Literacy — A Personal Experience

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If you can’t save on N5,000, you would not save on N500,000

I mostly agree with the statement. I think I have been passionate about savings/investments for as long as I can remember. I believe savings is a habit/culture and I don’t know if it can be taught. I often wondered where/how I learned, because I would like to be able to teach it. I have no recollection of reading any specific book/material where I acquired it. I remember owning a “kolo” (piggybank) as early as 5 or 6. Every grandchild owned it, courtesy the grandmother. Frankly, the most likely answer is that I was born “Ijebu”, and depending on who’s defining it — it’s either frugal or stingy — take your pick. By age 15 or 16, I had started to buy stocks on the Nigerian Stock Exchange. I remember buying Chartered Bank for sub N3. Today, those shares are trade for around N32.

Nothing changed during my four years in University. After a few months in University, I stopped spending my pocket money. I would travel from Ota to Somolu to buy drawing paper, and then resell to students. Every new set of “provisions” was my capital; after selling my provisions, I’d go to the Sango market to purchase, then resell. Wash, rinse, repeat. I basically lived off withdrawing small profits from “my business”. It was the IPO boom time in Nigeria, they were a dime a dozen, even your gate mallam could do and IPO if he got a good financial adviser; and this untouched pocket money allowed me participate in these IPOs. Dangote Sugar, Transcorp, Zenith Bank, Oceanic Bank, Lafarge, the Afrinvest Mutual Fund, Stanbic Equity fund. At peak market, I might have had a portfolio worth over N1m…until the market crash — a very expensive, albeit useful lesson for me in risk management.

Fast-forward to my first job, earned N600k p.a for two years at my first job, and I recollect having saved about N300k. When I started working at a bank,(And that’s when I realized how pervasive financial indiscipline was), I remember buying two plots of land for some N900k in the first year, which was just under 50% of my annual net salary. Now you are reading this and saying, “oh he did not have bills, he did not have rent to pay”, “unexpected health bill” and other such excuses. Of course, you are correct. I have no intention to compare apples with oranges. But there were many of my colleagues, with similar situations, who also had no rent expenses, no bills, etc, who, would be unable to account for 50% of what their first-year income was spent on. One way I plugged leakages expense wise was clothes. I hand-washed my clothes for the first two years. At N100/item, it would have cost me about N30,000 per annum. Which is money I could then put towards buying T-Bills at 18% or the contribution towards a tangible asset.

The reason I started the story from when I was under 10yrs old is to explain the point that, you don’t suddenly wake up one day, “when you are in money” and know how to be responsible with it. About 70% of people who win lump sums in lotteries file for bankruptcy few months/years after, i.e, they are usually worse off than they were prior to winning the lottery. To relate, this is the same thing as thinking you would become financial accountable when you start earning certain sums of money or get a pay raise. I honestly doubt it works that way. Even Jesus said, the one who is faithful in little, would be faithful in much. Financial Responsibility is one of the few cases where past performance is almost a perfect predictor of future performance.

Now married, and the de facto CFO and CIO (Chief Investment Officer) of our household, nothing has changed. We plan our expenses. The Girl always checks in “do we have money for this?” sometimes I have the answer right away “not right now” other times, I need to check our excel. Yes we have an excel, we plug in our expenses 3–6 months ahead, and plan for them. I check our bank accounts every other day to audit. When our power bill sky rockets in a month, we decide how to ration the heating/cooling. If we spent too much on eating out in a given month, we are aware that date nights for the next few weeks would be couch, popcorn and Titanic. We have a household balance sheet (shared a copy if you’d like to start keeping one), we manage usage on our credit cards and judiciously repay on school loans to manage our overall interest expense. I find that unlearning and learning new things after certain formative stages are the most difficult thing, so I understand how that if savings habit was alien to you growing up, it’s unlikely for it to change now. Or at least it would take more effort than it should ordinarily have.

But I don’t know that it is ever too late. You need to take control of your (financial) life and although I am unable to articulate to you how to go about it, which is why I have shared my personal experience, in hope that somewhere, somehow, you will find your own way.

The note expresses my own opinions and there is no business relationship with any company mentioned in the article. All typos are fully regretted.

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