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Financial Literacy

The Diderot Effect: How victims can beat it

Diderot Effect describes the buyer behaviour whereby we acquire items we normally wouldn’t purchase, or can do without.



Understanding debt, The Diderot Effect: Are you a victim? And how to beat It

Have you ever wanted a thing badly? Something money can buy. You never knew of its existence, until one day, boom! You hear of it or it stares you right in the face. Then, life is never the same until you possess it.

While this want can take root in a positive way, instilling in you a drive to become a better entrepreneur, investor, to live a better life, it could also lead you on a downward spiral.

Let’s say you finally possess it. How long does the satisfaction last before you avert your eyes to yet another want – one that’s even better or that’s meant to complement that item you’ve always wanted?

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The Diderot Effect takes hold in such a manner. Many of us may be victims without realizing it, like a frog in slowly boiling water.

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What is the Diderot Effect?

The Diderot Effect was coined in the 18th Century after the French philosopher and writer, Denis Diderot.

It describes the buyer behaviour whereby we acquire items we normally wouldn’t purchase, or can do without, simply because we recently came into the means to do so – maybe due to an increase in income, or an unexpected inheritance, or a lottery win.

The purchase of one new item necessitates the next, and then the next until you begin to live from paycheck to paycheck (no savings, no investments) or even fall into debt.

Let’s say you live in a two-bedroom flat. On getting a promotion or landing a new job, you can now afford to move into a better apartment.

But doing so might mean you have to purchase new furniture. The old ones probably wouldn’t be a good match anymore. Who pours new wine in an old skin?

Soon, your friends and family hear you are doing well for yourself. So demands and request for favours come pouring in. What choice do you have but to try to live up to your new social status and keep up with the Jonses?

Before long, amidst all the glitter, you realize that you have plunged yourself into debt. Denis Diderot was a man of meagre earnings who managed to live within his means. At the age of 52, he had written a vast collection of books.

Catherine the Great, the Empress of Russia at the time, purchased Diderot’s library for a whole lot of money, appointed him as the caretaker, and paid his salary 50 years in advance.

Finding himself in sudden wealth, Diderot decided to look the part and bought a beautiful scarlet robe. Soon, he realized how mismatched it looked amongst his old possessions.

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He replaced his comfortable straw chair with one of Moroccan leather. But then, it was no longer a good fit for his writing desk. So he had to get a befitting one. Next was a fancy rug from Damascus. And thus went the purchasing spree, each item more expensive than the one that came before.

Before long, he found himself in financial trouble. Believe it or not, we often fall prey to this habit – constantly buying new things that we believe will make us feel rich and happy – excessive consumerism.

The Diderot Effect can, therefore, be summarized thus:

  • Goods purchased by a consumer are in line with his/her self-image, and as a result, always complement.
  • The acquisition of a new good, which deviates from the consumer’s current complementary possessions, creates a dissatisfaction that triggers a purchasing spiral.

How to overcome the Diderot Effect

Life is all about improvements and achieving greater heights. As we grow, it’s only natural that we acquire more things.

But the key to good living is learning to focus on the things that matter, especially if you have a wife and kids, and if you care about your retirement.

Let’s now look at some of the ways you can curate your spending and master the Diderot Effect:

  • Eliminate FOMO (Fear of Missing Out)

Advertising agencies, fashion trends, and social media show us things we do not have. Therefore today, we’d rather purchase new items than maintain the ones we already own.

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Oftentimes we tend to forget that most of the posts on social media only show us the good life, but never the burdens those people have to bear just to maintain their standards.

  • Set purchase limits

To avoid tumbling down the hole of the Diderot Effect, set a limit on new purchases. When you have the cash, instead of immediately buying a big ticket item that you can do without, consider saving gradually towards it.


Achieving your savings goals makes you fulfilled and ensures that you always have an emergency cash reserve. Such purchases will then only serve as rewards for good habits.

  • Acquire good debt

This is debt that yields returns. Intentionally borrowing money to make good investments helps you keep your spending under control. When you remember you have a loan to repay, you simply have no choice than to set strict budgets for yourself.

  • Maintain your current system

Buy goods that complement the ones you already have. If getting that new pair of jeans means you also have to buy an extra pair of shoes (while you already have so many), consider getting another jean that will go well with the shoes you already have.

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The Diderot Effect is a subtle phenomenon. You may never realize when it has taken hold. And it has a huge impact on our finances.

Therefore, beware of sudden exposures to wealth. It may sometimes happen that the more we acquire, the less happy we become. The little things we used to enjoy are no longer enough as we try to upgrade our lives and meet up with social convention.

Remember, once you’ve set a higher spending limit for yourself, it can be difficult to go back down.



  1. David

    November 14, 2019 at 9:41 am

    This is a beautiful & useful article! 👍

  2. Anonymous

    November 15, 2019 at 3:12 pm

    Useful, I learnt something today

  3. Emmanuel

    November 15, 2019 at 5:02 pm

    Insightful post.

    Indeed, the fear of not standing out is often the beginning of ruin for many people. All it takes is discipline, a regimented financial lifestyle, and clear spending and saving goals.

    This article should help on the way.

  4. Chinedu Izundu Artino

    November 15, 2019 at 5:18 pm

    This is the reality of many salary earners, they keep screaming “Increase our salary” hoping it will better their lives but when the deed is done they feel more reasonable and sooner the demand for an increase comes again. Atimes what they really need is not an increase in salary but an increase in financial literacy.

    Awesome article on the Diderot effect

  5. Chukwuma Ume

    November 15, 2019 at 8:58 pm

    Lovely post

  6. Adenigba Michael

    November 16, 2019 at 8:20 pm

    Wonderful Article!!

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Personal Finance

Up for a raise? Use these 5 strategies to make it happen

To avoid appearing selfish or materialistic, here are five strategies to employ when demanding a raise.



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Requesting a raise is an important conversation that you should have with your employer, particularly if you believe your salary does not measure up with the value you bring to the company or the duties for which you are assigned.

In a bid to avoid appearing selfish or materialistic, many people shy away from this. They continue to expect the day the company will announce a raise or promotion for the employees. Although in some workplaces this sometimes plays out as expected, many other businesses seldom revisit the salary specifics and performance evaluation document of their employee to evaluate and conduct a correlation in order to make recommendations for a raise to those who merit it.

Demanding a raise does not entail asking for a favor from the company, it simply means asking for suitable market value for your job roles and responsibilities. In as much as this might be the right of an employee, it is necessary to know how to go about it appropriately in order to achieve a favorable outcome.

Here are five strategies to employ when demanding a raise:

1.  Evaluate your contributions and performance

To ask for a raise, you need to have a well-grounded knowledge of the positive contributions you have made to the company. Create a list or record of your discharge obligations or duties, as well as significant achievements that you made on the job. This will give you insight as to the value you bring to the company and what you get in return. Evaluating your results will provide you with a sound understanding of your efforts, achievements, and will also increase your confidence to demand a pay raise. This will help your boss realize that you know your worth.

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(READ MORE:Banks push customers towards self service in the “new normal”)

2.  Boost your negotiation power

Negotiation is the process of reaching a fair agreement for the parties involved by means of meaningful conversations. Most employees cower in the face of salary negotiation because of the impression this may create about them to their employers. Others who are brave enough to take the step lack the skillfulness to achieve or reach a handy result.

Negotiation is an art that should be learnt. Employees should improve on their negotiation skills if they intend to get a fair bargain for their efforts. One of the negotiation techniques that can be incorporated when asking for a raise in pay is to layout specific options from which the employer is to choose. This will offer both parties substantial choices to make a decision from.

3.  Right timing matters

There is a time for everything. As cliché as this may sound, it is a fact you should accept and work with. You have to assess the company’s financial position to ascertain if asking for a raise will be feasible. When this is done, you can proceed to arrange a meeting to discuss it with your employer. Find out from your employer when it is convenient to discuss issues of concern that you have.

4.  Present cogent reasons

When demanding a raise, one of the strategies to achieve this is to tender reports or proof of your achievements or efforts that have contributed to the development of the company in some way. You can request for a raise on the grounds of the length of service, duties, or performance. Your motives should reflect the principles of the company and they should be objectively stated.

(READ MORE: Nigerians will now pay N50 stamp duty on electronic receipts – FIRS)

5.  Express gratitude

Appreciate the employer for the ability to work for the company and show a sense of appreciation for their service. Let the employer know that your demand for a raise does not mean that you are dissatisfied with the employer or the work, but rather that it is a request for what suits the specified roles you play.

For a variety of reasons, many organizations give an employee a raise based on different factors that range from efficiency, motivation, length of service, promotion, and a few other factors. If you are assured that you have fulfilled the requirements for a raise, the methods mentioned can be used to improve the chances of having a raise.

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Personal Finance

Personal Finance Culture: The 4 Cs of Financial Success 

To achieve financial success, the 4Cs will be of great help.



Borrowing money, Personal Finance Culture: The 4 C’s of Financial Success 

Many Nigerians who had a pseudo-confidence in their financial stability, were rocked by the storms of the economic hardship that followed the COVID-19 pandemicSome did not survive it, while those who did, now seek ways to be better financially equipped for future eventualities. 

It’s six (6) months since the COVID-19 outbreak was officially declared a global pandemic by the World Health  Organization (WHO) on March 11th, 2020With the full enormity of the pandemic in mind, we cannot come out of this without noting its attendant life lessons. Interestingly, some of those lessons correlate with principles that can enhance your personal financeon your journey to financial freedom.  

READ: Emirates Airlines banned from operating in Nigeria

Financial freedom does not happen overnight, as it results from self-discipline and good money habits practised consistently over time. 

To help you on your journey, I have come up with the 4Cs. To achieve financial success, you must be; 

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  1. Creative – Find creative ways to earn more money. Having more than one source of income is a good way to increase your financial security. I’m sure the people who lost their jobs or took a pay cut during the pandemic will agree with me.
  2. Conservative – Be conservative with your expenses, and make sure to spend less than you earn. You can actually save more if you stick to a budget. It is okay to occasionally reward yourselfand enjoy the finer things of life. But that should also be on budget. 
  3. Consistent – Form the habit of saving and investing part of your income. As far as savings go, you need to have at least 3 months’ worth of living expenses, stashed away in liquid assets – Emergency funding, to cushion the impact of job loss, unplanned medical expenses, and other emergencies. It also applies to small businesses – many SMEs without any financial buffer felt the impact of the lockdown from Day 1. Investing, on the other hand, is the only way you can grow your money. You should take it seriously; develop the right mindset, become financially intelligent, and seek expert advice before taking a step. 
  4. Careful – Be careful who you listen to. Not every investment advice is good for you, and you should do your due diligence before releasing your money. 

READ: Effective financial planning after taking a pay cut in Nigeria

So, will you be making any changes to your money management style? What did you wish you learnt about money pre-COVID-19? 

Importantly, we are not out of the woods yet. The virus is still out there, and you should stay safe, as Health is Wealth. 


 Temitope Busari, CFA 

Temitope is an Investment Professional, with over 11 years of cognate experience spanning regional financial markets across Sub-Saharan Africa. Her technical skills cut across Treasury, Risk management, Fintech solutions, and Strategy. With a passion for positive social impact, she leverages multiple media platforms to advance financial literacy efforts, helping individuals and small businesses make better money decisions. 

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Personal Finance

Budgeting apps that help you manage your personal finance

In today’s world, these apps make it easy to effortlessly manage your finances.



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In our fast-paced lives and rapidly evolving world, technology makes it possible to get things done in a more convenient manner, saving time, energy, and other resources. Personal budgeting should be a daily routine and somewhat a habit in our lives, unfortunately, not many people pay attention to this.

The tech world has taken notice and provided us with ways to manage our finances with convenience and ease through mobile apps development.

Life is good when you are on top of your money and ahead of your expenses; these apps make it easy to effortlessly manage your finances.

READ: How hackers break into your WhatsApp account, and how to avoid them

1. GoodBudget: This budgeting app uses the shared envelope-budgeting principle. With its virtual tracking program, it makes it possible to not only, keep up with friends and family by syncing shares and budget, but also lets you save for big expenses and pay off debt. With a friendly user interface, the app makes it easy to categorically differentiate your regular monthly expenses from annual savings goals and irregular expenses. It is important to note that this particular app doesn’t sync transactions with your financial institutions, so for every amount that comes in or goes out, you’d have to manually enter the transactions. Another incentive this app offers is that it provides customisable reports for you to keep track of budget trends, offers helpful tips on how to create a budget and get ahead of your expenses. Works on android and iOS devices.

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2. Piggyvest uses the traditional, simple saving idea of a piggybank, also locally known as ‘kolo ’. It presents you with the opportunity to use the ‘piggybank’ feature to reach personal savings goals more quickly. There are several other features for various purposes such as ‘Target Savings’ which helps you save for multiple goals like holidays, fees, and special events, ‘SafeLock’ which secures your funds by locking it until your pre-selected, this helps avoid impulsive spending. There is also the opportunity to partake in investments by investing in little bits that one can afford whilst still enjoying the same rate of return as a well co-investment option. Every option is vetted and secured by Piggyvest and you can easily monitor the progress of your investments. This is a Nigerian based app and accepts all Nigerian debit cards.

READ: What Nigerian banks consider before granting personal loans

3. YNAB short for, You Need a Budget, is a personal finance help app that teaches you how to manage your money. The general principle is to ‘give every dollar a job’. For a dollar saved, it is saved for a particular purpose which could be long term or short term. It strives to eliminate the common trap of living paycheck-to-paycheck. One of the pros of this software is that it displays the user’s financial reports and syncs transactions so that users can seamlessly categorise their finances at a glance. It has a more proactive rather than reactive approach to budgeting. For every dollar you’re expected to earn, work is assigned to it, that is, to either spend or save. With over a million downloads, it’s gained popularity with its educational and philosophical approach to financial management.
Works for both android and iOS devices.

4. Carbon: If you have ever been caught in a predicament where you needed just a small amount of cash to solve an emergency, but you probably thought it was not possible to access loans in such a short period of time, you’ll really love this bit of good news. There’s a mobile app that you can use to get that ‘small cash’ without stress and have the money deposited directly to your account in 24hours or less. That app is called Carbon. Formerly known as Paylater, this is a personal finance and loan service app that helps you make all sorts of bill payments and money transfer with ease. It is built to help users understand their spending habits and learn how to categorise income and expenses to have full control over their finances. With this app, you can get a short-term loan amount as low as #10,000 and as high as #500,000. In addition to making it easy to recharge your phone, transfer money and have access to short-term loans, it also provides users with the option to invest using Payvest and earn up to 16% per annum. Available on Google Playstore.

READ: Zoom reports a surge in profit of 3,300%

5. Expensify: This mobile and web-based application is developed from the world-leading expense management company of the same name. It was originally developed to make it bearable for anyone to analyse expense reports. It is a software that allows individuals and businesses to track and file expenses such as fuel, travels, etc. Just by snapping receipts of transactions, the software uses artificial intelligence to identify the details of the transaction and automatically categorise and save the expense. It also allows users to download these reports based on user transactions. The product offers two payment options for individuals and organisations; for either annual subscriptions or pay per use charge. One of the pros of this particular app is that you can easily convert currencies for international travel. It is compatible with android and iOS devices.

6. PocketGuard: This is a personal finance help tool that makes for a more simplified budgeting snapshot. It helps you manage your disposable income, bills, and subscriptions. While some other personal finance apps try to provide you with tools to discipline your saving and spending habit, PocketGuard simply shows you what you have available for daily spending. The software is built to help you manage your everyday spending after your regular bills and subscriptions have been paid. Upon sign up, the app syncs with your financial accounts and helps you keep track of your account portfolio. Using it to pay for services helps you stay ahead and negotiate better rates. With AutoSave you can automatically grow your savings to the desired amount.

7. Financial Calculator: This app is handy for calculating the future value and present value of your financial assets. Some of its features help you to; perform financial calculations with ease and on the go, compare interest rates, compare lease and auto loans, determine how much time is needed for you to pay off debts, and to calculate the exact tip you should give for services rendered.

8. Unsplurge: We’ve all been there at one point or another, where we felt the need to splurge sometimes on impulse and give in to personal cravings. But then when the utility has declined you start regretting your impulsive spending and berate yourself for not being disciplined enough. Well, with Unsplurge, you have an opportunity to discipline yourself. It is built to encourage you to save money by working on your goals. There is no limit to the number of goals you can decide to save money for. You just log savings and monitor your progress. You can also get inspiration and encouragement from family and friends as they cheer you on and share their success stories as well. This app is built only for iPhones.

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Explore the Nairametrics Research Website for Economic and Financial Data

9. Personal capital: This self-help tool basically offers two primary functionalities; a free personal money manager and a paid investment management service. The free function allows you to monitor your income, assets, expenses, and investments from a single portal, get investment advice on how to optimise and make more money, whereas the paid version which is also known as the Wealth Management program offers a more personalised portfolio management.

10. Mint: This is one of the most popular personal finance apps of all time. This app has been hailed for its easy-to-use programs and friendly user interface. With a sort of colour-coded system, it gives a more graphical display which helps users navigate the app seamlessly.

Explore the Nairametrics Research Website for Economic and Financial Data

Also known as intuit mint and formerly This personal finance management app allows users to track bank, credit card, investment, loan balances, and a number of other transactions through a single user interface. One of the pros of this app is that it automatically syncs with your financial institutions to track user bills and gives constant alerts to ensure you keep up with payments. Based on financial data and transactions, its features allow users to create categories, track budgets, and set financial goals. It promotes savings by recommending credit card deals and insurance. The software is said to be securely protected, using a number of financial institution level security and high-level encryption. It was originally designed for iOS but an android version has been made available in recent years.

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