Some Nigerians are used to making very ludicrous financial decisions – like borrowing money to finance a wedding. In 2009, Mazi Elekwachi (not his real name) borrowed nearly N5 million from a now-defunct bank to “throw a befitting burial” for his dead father-in-law. This is something he later regretted because, not only did he find it difficult to repay the loan, he ended up forfeiting his collateral.
Fintechs are encouraging reckless borrowing?
A loan can be a very tricky funding option. This is why I personally believe no meaningful economic progress cab be based on loans; especially when said loans are not properly planned and utilised. Interestingly, it has become very easy to borrow money in Nigeria today, many thanks to the availability of many Fintechs offering quick loan services. This development is encouraging reckless financial behaviour, particularly so among Nigeria’s young working population.
Loans should be used wisely
For the record, this article is not intended to serve as a campaign against loans. Without a doubt, loans have many benefits that have stood the test of time. As a funding option, one can rely on loans to finance a new business idea for instance. You can also carefully use loans to take advantage of short-term investment opportunities. Some parents even use loans to finance their children’s; after all, educating a child is an important investment. Likewise, loans can be used as the financial option of last resort in any given situation, provided that all other appropriate options have been completely exhausted.
Note that the holy grail of wise personal finance management is never to spend beyond your means. Unfortunately, reckless borrowing can encourage reckless spending. This article is, therefore, intended as advice. Below are some of the things you should never borrow money to do. Feel free to consult your financial expert if you have a need for further clarification.
Do not borrow to furnish your apartment
While the likes of Stanbic IBTC Bank do offer rental loans, it is absolutely not advisable to borrow money for the purpose of furnishing your apartment. Generally, it is unwise to borrow money for the sake of expenditure. Therefore, unless you are borrowing for the purpose of generating further income or meeting a pressing need, then you have no business borrowing at all.
If you cannot afford the money at the moment, then your apartment can be furnished some other time. The most important thing is to have a place you can rest your head at night. Imagine all the interests that will accrue on the loan and the likelihood that you may not even be able to repay as at when due.
Do not borrow to buy a car
This may come across as controversial, seeing as many Nigerians like the idea of owning their own. Most high-salaried individuals are also known to borrow money to finance their car purchases. So, you may be thinking of doing the same. After all, Cheki is known to offer some of the best car loans for Nigerians.
However, sound personal finance management requires that you desist from living a life of luxury based on credit. A car is not a basic need. Therefore, unless you are buying the car to start an Uber business, save up until you can afford to buy one without a loan.
Do not borrow to sponsor a leisure trip
In April this year, Kwikmoney sponsored an advertorial encouraging people to borrow money to travel for Easter holiday. The fact that some people actually bought into the idea couldn’t be more surprising! Holiday loans are financial traps you should do everything possible to avoid. You don’t know to accumulate debt just to travel to a destination for a few days or weeks. Once again, unless you can afford it now by paying for it, leave that holiday to Ibiza in your bucket list for the meantime. Your time will come.
Do not borrow to upgrade your wardrobe
Without a doubt, it is important to look nice. After all, first impression matters a lot as the saying goes. Moreover, the fact that we live in a superficial world means that we get to be constantly accessed based on what designer label me are wearing. But then who do you think are you deceiving when you borrow money to buy those expensive clothes? What would you gain if you wear Gucci suites while your account balance is wearing “zeros”? Let’s be financially wise!
Fellow Men, do not borrow money to buy her the most expensive diamond engagement ring!
If your woman loves you for who you are, she wouldn’t care if you go to Katankowa Market to buy her an engagement ring. Love is all that matters, according to Diana Ross. I mean, think about it – why should be fake just to impress your potential spouse? If she won’t accept the kind of ring you can afford to buy without borrowing, then that should tell you a lot about the long-long journey you’re planning to start with her.
Do not borrow money to organise an expensive wedding
In a desperate bid to organise a wedding that will trend on Bellanaija Weddings, some couples go the extra mile by incurring serious debts. And the question that I keep asking myself is this why would anybody even do that? Who are you trying to impress? Do you realise that very soon there will be kids to take care of? It is not cheap to birth a child in Lagos, by the way. Let’s not even start talking about school fees yet… Please, do not borrow any money to host any wedding. Thank you.
You should always concern yourself with how to properly manage your personal finances. Borrowing to spend isn’t a good way to manage your finances. As Chu Achara (a banker) rightly noted, “it is never advisable to borrow money for any purpose other than an investment or a business.”
FG to provide financial support for 1.7 million businesses, individuals in next 3 months
FG had announced specific programmes aimed at cushioning the impact of COVID-19 on MSME businesses.
The Federal Government has announced plans to provide financial support for 1.7 million businesses and individuals across the country within the next 3 months.
This disclosure was made by the Minister of State for industry, Trade and Investment, Ambassador Mariam Katagum, at the virtual commissioning of the Fashion Cluster Shared Facility for Micro, Small, and Medium Enterprises (MSMEs) tagged, Eko Fashion Hub, in Lagos.
Katagum disclosed that the initiative is borne out of the Federal Government’s continued commitment to helping cushion the devastating impact of the coronavirus pandemic on the economy by saving existing jobs and creating new job opportunities.
The minister said that President Muhammadu Buhari’s administration, through the Economic Sustainability Committee, had announced specific programmes aimed at cushioning the impact of COVID-19 on MSME businesses.
She said, “The Federal Government is fully committed to empowering Nigerians; more so in the face of the COVID-19 Pandemic. In this regard, the government, through the Economic Sustainability Committee had announced specific programmes aimed at cushioning the impact of COVID-19 on MSME businesses.
“These programmes include among others, the N75 billion MSME Survival Fund and Guaranteed Off-take Schemes of which I have the honour to chair the Steering Committee for the effective implementation of the projects.
“The project, which will run for an initial period of three months, is targeting 1.7million entities and individuals and has provisions for 45 per cent female-owned businesses and five per cent for those with special needs. The registration portal for the schemes is set to open on Monday 21st September 2020 and I urge you all to take full advantage of the schemes.’’
The Nigerian Economic Sustainability Plan which was produced by a committee headed by the Vice President, Yemi Osinbajo, is a response to the health and economic challenges which foisted on the country by the outbreak of the novel coronavirus pandemic.
Aside from developing robust monetary policies and fiscal measures to enhance oil and non-oil government revenues and reduce non-essential spending, the plan also includes a N2.3 trillion stimulus package for the economy.
Katagum said that the schemes were at the core of the N2.3 trillion stimulus package being implemented by the Federal Government. She said that the commissioning of shared facilities was also expected to provide succour and relief to the teeming micro-businesses in need of space and infrastructural support
8 Ways to set yourself up for financial freedom in your 20s
These simple tips might just be what you need to set yourself up for financial freedom.
Your 20s is one of the most important stages of your life, especially in determining your financial trajectory. One certain thing about financial freedom is that no one ever stumbles on it, you have to plan, and be intentional about it.
Mismanaging your 20s could see you spiral into a rat race that you may never recover from, especially after setting up a family.
Although it might be very difficult to become financially free in your 20s, it is your responsibility to ensure that you are on the right track. How do you do that? Simply go through our list of 8 ways to set yourself up for financial freedom in your 20s, below.
Also, remember that it is a process. Unless you hit a jackpot and invent a product that goes viral worldwide in your 20s, you have to follow the process. And even if you hit a jackpot, financial prudence is still necessary for growth and sustenance. Look around you, numerous examples of individuals exist, who were once millionaires or billionaires, but now declared bankrupt. This should tell you something.
8 Ways to Set Yourself Up for Financial Freedom in your 20s
1. Draw a blueprint for the future: Financial freedom is a goal. Just like other achievements that you planned to accomplish at a set time, you have to perceive it as something that you need to attain. The first step to drawing a blueprint is having an idea of what it would look like. Likewise, the same concept applies here; set your mind to your plan, and draw it out. Set milestones that you plan to hit, and set dates when you plan to achieve them. The path to financial freedom entails these key factors; identify them, and you’re well on your way to becoming a financially independent 20-year-old. Remember, nothing perfect was created without an initial plan in place. Faraday didn’t just wake up one morning and create electricity with a snap of his finger, it took countless hours of planning to invent the greatest element used by man.
2. Understand investment and leverage your knowledge of it: Sure, this could have simply said; “Invest more often” or “Start investing” but people tend to read these articles and act based on the words of the article solely, rather than what the words also imply. Investment is good, and even better, do it more often but it is important to note that it is not something to jump into out of the blue. It takes reading and studying to understand how to play your cards right when investing.
After studying the art of investing, then you can proceed to the next phase; leveraging your newly gained knowledge. Invest wisely in places where you are sure to get a high return. Do these in different places, and in a matter of time you can puff your chest and do “yanga” to those friends that said; “You’re young, spend your money and chop life”. We’ve all had those kinds of friends. Be wise, make smart investments, and work your way to gaining financial freedom in your twenties.
3. Find a financial planner: The importance of this step cannot be undermined. While some try to gain financial freedom on their own, many get financial planners to help them attain this feat. A financial planner would help you create detailed and useful financial forecasts that will let you know what you have done financially, and how it affects your financial forecast. In some cases, they could also advise you on the best financial oriented actions to take to get the best results in your financial forecast. Your goal is to be financially independent in your twenties, great! Set a forecast that dates to your set time, and you can have a rough idea on what your financial status would look like in that year.
If you’re curious to know what the heavily reiterated “Financial forecast” would address, they portray, financial risk management, investment planning, cash flow management, insurance planning, tax planning, business succession planning and more.
4. Filter needs from wants: If you’re planning to gain financial freedom in your twenties, you need to learn how to identify what you “need” and what you “want” out of mere interest. This is not only a key step towards financial freedom but also to adulthood. Needs in this context, don’t necessarily mean the “essential human needs” like food or shelter. A need is what is exclusively crucial to you at the moment, which is worth spending money on. From that definition, you can most likely conclude on what “wants” would be. When trying to make a purchase, always ask yourself if you are in dire need of it or consider the benefits of getting it; do they outweigh the cons of not having it?
No matter how convincing that salesman is, don’t let him talk you into buying what you do not need. Spending on the necessary things gets you financial freedom, and it’s a long-term ideology in adulthood.
5. Don’t rush, patience is key: “Click here to earn millions like this sharp guy from Lagos.” or “Invest 20k to get 100k in a week.” Here is a tip; work towards achieving your goal of financial freedom, but know that it will not be easy – nothing worthwhile is easy. Be patient, don’t jump into schemes and scams, thinking they are smart investments. Point number 2: Understand investment, and leverage your knowledge of it. There is no “get rich” quick path or “double your investment in 24 hours”. Most of these schemes bank on paying you with other people’s money, and eventually many lose and only a few benefits. Keep in mind that wealth grows and accumulates over a long period, therefore be patient and disciplined enough to see it through.
6. Don’t secure loans you are not sure to repay: Look to secure loans when it is necessary, and when doing so, ensure that you can pay it back. For example, the debt you acquire to finance a higher education should not exceed your expected income. Do not borrow a sum that you cannot repay, and always consider the interest rate of the debt. The last thing you want to do is be the person who wants to gain financial freedom but has a lot of debts to clear. For you to move forward, you have to be free of debt. Mark Cuban once said; “The best investment is paying off your debt”.
7. Be a businessman, negotiate: Don’t be the person that always agrees to the price called by the seller, neither should you be the kind of person that says “I don’t like negotiating, it makes me seem cheap” – that’s absurd. If you’re going to be financially independent, you have to understand that negotiation is one of the most crucial aspects of a business. It allows you to get what you want at a rate that is in your favour, as opposed to its initial price. By negotiating, you could save thousands annually. Imagine if you always had to pay the exact amount in all the purchases you have made? That is a lot of money that you could have saved up to invest with.
8. Always make a budget and stick to it: It is not enough to have a budget, it is just as important to follow it. This allows you to record your planned expenses, and it gives you a certain poise and discipline when spending, as you would be conscious of the fact that a certain amount is meant to be spent on something important, that you have planned. Having a monthly budget that you can commit to is a great way to set yourself up for financial freedom, one that we highly recommend.
Your 20s are not going to be around for long. It’s a time where you can make key decisions with minimal consequences and still have time to recover. However, we urge you to learn from these eight tips and accompanied by hard work and perseverance, you can be sure of gaining financial freedom in your 20s.
How to get the right finance lawyer for your business
Hiring the wrong lawyer may result in grave consequences for your business.
Businesses fail and close down everyday. Statistics show that globally, about 20% of small businesses fail within their first year. There are many reasons why these businesses fail. In Nigeria, however, some businesses fail due to bad financial decisions. And that’s why every entrepreneur needs a good finance lawyer to offer the right fiscal advice.
There are many successful companies in Nigeria that hire finance lawyers to help them deal with legal issues relating to their finances. Some businesses even have robot lawyers that analyze data and make accurate financial predictions for them.
Finance lawyers have special knowledge representing their clients in financial matters like securities, banking, and bankruptcy. They are also involved in company registration, tax compliances, raising capital, and drafting agreements for their clients.
For example, the Finance Act of 2020 has amended the tax laws in Nigeria, and businesses are required to comply with the provisions. A good finance lawyer will help your business to act in accordance with all the tax legislations.
Hiring the wrong lawyer may result in grave consequences for your business including fines, liquidation, and lawsuits.
A large percentage of lawsuits in Nigerian courts are financial disputes involving many businesses.
Below are some tips on how you can get the best from your finance lawyer:
Be prepared to share important financial records
Lawyers work with facts and are therefore more effective when you provide them with all the information concerning your business.
Before you hire a finance lawyer, be prepared to share all necessary financial records. Don’t hide any records. Being open with your lawyers will enable them to give you the best financial advice for your business.
Your finance lawyer can protect your interest if you grant him/her access to all your financial information.
Do some research to find the most qualified Finance Lawyer
Most people assume that all lawyers have the same level of knowledge and expertise. But law practice is a vast field and every lawyer has a favorite area of specialization.
While most lawyers are into general practice, some focus only on one or a couple of areas.
Researching before hiring a lawyer means locating one with the right knowledge and skill set. Researching will help you to hire the best hand for your kind of business.
A finance lawyer who understands your business can assist you to lay a proper foundation and help you avoid problems that may crop up in the future.
Ask for a referral
One of the best ways to find the right kind of finance lawyer for your business is to ask for a referral from reputable lawyers.
Lawyers know the strength and capabilities of their colleagues and are always willing to refer you to only the best in their field.
Another great way to ask for a referral is to consult a fellow business owner to recommend an experienced finance lawyer.
Investigate the Finance Lawyer you intend to hire
With time, every lawyer tends to develop a reputation. While some of them are good, others are not so good.
Take into consideration feedback about the finance lawyer you intend to hire. Reviews and feedback will help you to decide if the lawyer will make a good employee or not.
You don’t want to get involved with a finance lawyer who is in court with most of his/her clients.
One good way of investigating a lawyer is to make inquiries at places where the lawyer practices.
Court workers see lawyers work every day and have a good knowledge of their practice and personalities
Focus on the Finance Lawyer’s experience
Experience is a huge asset in law practice. Experienced lawyers not only make your job easier, but they make fewer mistakes.
An inexperienced finance lawyer is bound to leave you exposed to financial elements that will harm your business.
Business owners should therefore consult only finance lawyers with vast experience in their business area.
For example, if your business involves an international transaction, it would be a bad idea to consult a lawyer with no knowledge of international businesses.
Don’t forget: size matters
Many business owners are sometimes torn between hiring big law firms or small law firms for their financial issues.
The kind of law firm you should hire for your business depends on the type of service you want.
If your business involves complicated financial transactions then your best bet is to hire a large law firm.
Big law firms have wide networks and resources to push through and get your job done in good time.
Small law firms, on the other hand, can provide prompt and personalized services whenever you need them.
Get a lawyer you can afford
As a business owner, your primary objective is to make money. Law firms are also run as businesses and set up to make money.
Although the cost of legal services does not come cheap, they are however negotiable.
Some business owners have made the mistake of engaging lawyers without determining the cost of those services.
Failure to find out the cost of the legal service of a lawyer or law firm will expose you to paying whatever is presented as lawyer’s fees at the end of the day.
Take note that our courts do not joke with lawyer’s fees as they believe a lawyer deserves his/her wages.
Have a written agreement
After discussing and agreeing with the lawyer on the fees and the mode of payment, insist on having the terms written down.
Go through the agreement and if you do not understand any clause or provision, seek a third party interpretation before endorsing it.
With a written agreement, you will have a pretty good idea of how much you are paying for the legal services.
Wrap up on hiring the best Finance Lawyer for your business
In business, anything can happen. Business owners should therefore take every step possible to minimize their financial risks.
One of the best ways to protect yourself and your business interests is to hire a good financial lawyer. However, the onus is on you to hire top finance lawyers that have the right experience and skills to help your business thrive.
Don’t forget: it is better to hire a good lawyer now than spend money in the future trying to extricate yourself from trouble.