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Living beyond your means: A deterrent to you and your financial freedom

Here are some examples to alert you that you are living beyond your means and ways.




Spending all that you have worked for in a split second without realizing it, is an obsession a lot of people are combating with. They spend money on frivolous items, varying from acquiring expensive phones, changing their closet, and purchasing a high-priced handbag. Though these items seem essential, however, it is imperative that one apply prudence while at it to avoid living beyond their means.

You can read our previous article on Lifestyle Inflation Here

Lifestyle inflation has no guide, and you can develop the habit without realizing. Here are some examples to alert you that you are living beyond your means and ways to change the precarious behaviour to avoid going bankrupt and to aid you on the right track towards achieving financial freedom.

1. High accommodation

In some places in Nigeria, rental and mortgage are very expensive. The reason is because of Estate settings, unlimited power supply and security provisions. Though, this is true does not mean you have to spend almost your annual salary to live in those locations.  Personal finance experts usually advised that your housing should not be more than 28% of your income, and if your housing is above this percentage it simply means you are living beyond your means. Nevertheless, if you find yourself in this situation, you can consider the following:

  • Downsizing your rent pay by moving to a comfortable and affordable area.
  • Having another means of income to enable you sustain the high rent.
  • Getting a roommate that you can split the rent with.

2. Buying a Car

Acquiring a car is a necessity. There is thumb rule in place of not spending a half of your annual household salary on a car. For instance, if an individual is earning 2 million a year should at best buy a car worth 1 million.  However, make sure it is a used car and a brand-new car.  I will advise that you spend only what you can truly afford.

Read Also: How to prioritise your needs over wants

 3. Extravagant Lifestyle

Living an extravagant life has been a major way people live beyond their means. They spend a lot of money on themselves and on their friends every weekend that they sometimes end up not having cash on hand for their household expenses.  A way to tell if this is happening is to think about your current spending situation and calculate your spending expenses.  Look back over your purchases for the last month. For example, excessive eating out, spending so much on friends, clubbing and shopping. After this, look around at the rest of your life, and if you struggling to pay your utilities/ household expenses, it is time to change the situation to take better care of your money.

4. Living on Paycheck to Paycheck

It is possible to work for a month, make good money, and still feel that you do not have enough. It usually happens when you do not save much but spend everything that comes into your account. Most people in Nigeria live on paycheck to a paycheck basis. It is easy to feel trapped due to expenses, especially when you are just maintaining a lifestyle and not growing wealth. You can fix this by cutting back on unnecessary purchases, develop the habit of saving, from there you can begin to invest.

5. Lack of Budget

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If it seems that you are always looking at your bank account, wondering where your last salary went, you are not alone because you might be living beyond your means. Not being sure how you spent money so quickly are signs that it is time to take a second look. If you want to get your money organized, having a budget is the first thing to do. How do you get started? Begin by listing your bills and expenses one by one and marking down how much each one costs. Then plan out where you want your money to go and strictly abide by it


6. Playing the Comparison Game

Perhaps your colleague bought a new car, or your friend buys a larger, more expensive house. You then feel that you should have what they have, even if your situations are very different. Comparison can lead you down a dark path quickly. Instead of comparing your life to others, choose to be happy about what you have and work towards what you want. Remember that your journey is not anyone else’s, and because of that, you can be excited about your own life without looking at what others have.

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Read Also: 7 Reasons You Need to Start Getting Thrifty

In conclusion, living beyond your means is something that can happen to anyone. What matters is what you do once you realize it. Changing your habits and lifestyle might seem difficult initially, but you will find it is worth it. Begin budgeting, saving, and investing. Once you see some progress toward your goals, you will be on your way to living a much better financial life.

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Personal Finance

5C’s of creditworthiness: What lenders, Investors look for in a business plan

Business owners need to be aware of the criteria lenders and investors use when evaluating the creditworthiness of entrepreneurs seeking financing.



Five things to consider before securing a loan

Banks usually are not a new venture’s sole source of capital because a bank’s return is limited by the interest rate it negotiates, but its risk could be the entire amount of the loan if the new business fails. Once a business is operational and has an established financial track record, banks become a regular source of financing.

For this reason, the small business owner needs to be aware of the criteria lenders and investors use when evaluating the creditworthiness of entrepreneurs seeking financing.

Will the business that an entrepreneur actually creates look exactly like the company described in the business plan? Of course, not.

The real value in preparing a business plan is not so much in the finished document itself but in the process it goes through – a process in which the entrepreneur learns how to compete successfully in the marketplace. In addition, a solid plan is essential to raising the capital needed to start a business; lenders and investors demand it.

Lenders and investors refer to these criteria as the five C’s of credit.

READ: 5 ways to raise funding for your business

1. Capital: A small business must have a stable income base before any lender is willing to grant a loan. Otherwise, the lender would not be making, in effect, a capital investment in the business. Most banks refuse to make loans that are capital investment because the potential for return on the investment is limited strictly on the interest on the loan, and the potential loss would probably exceed the reward. In addition, the most common reasons that banks give for rejecting small business loan applications are undercapitalization or too much debt. Banks expect a small company to have an equity base investment by the owner(s) that will help support the venture during times of financial strain, which are common during the start-up and growth phases of a business. Lenders and investors see capital as a risk-sharing strategy with entrepreneurs.

2. Capacity: A synonym for capital is cash flow. Lenders and investors must be convinced of the firm’s ability to meet its regular financial obligation and to repay loans, and that takes cash. More small businesses fail from lack of cash than from lack of profit. It is possible for a company to be showing a profit and still have no cash – that is, to be bankrupt. Lenders expect small businesses to pass the test of liquidity, especially for short term loans. Potential lenders and investors examine closely a small company’s cash flow position to decide whether it has the capacity necessary to survive until it can sustain itself.

READ: How to scale as a small business on a budget

3. Collateral: Collateral includes any asset an entrepreneur pledges to a lender as security for repayment of a loan. If the company defaults on a loan, the lender has the right to sell the collateral and use the proceeds to satisfy the loan. Typically, banks make much unsecured loans (those not backed up by collateral) to business start-ups. Bankers view the entrepreneurs’ willingness to pledge collateral (personal or business assets) as an indication of their dedication to making the venture a success. A sound business plan can improve a banker’s attitude towards venture.

4. Character: Before extending a loan or making an investment in a small business, lenders and investors must be satisfied with an entrepreneur’s character. The evaluation of character frequently is based on intangible factors such as honesty, integrity, competence, polish, determination, intelligence, and ability. Although the qualities judged are abstract, this evaluation plays a critical role in the decision to put money into a business or not.

READ: 7 Ways to pay for your higher education

5. Conditions: The conditions surrounding a funding request also affects an entrepreneur’s chances of receiving financing. Lenders and investors consider factors relating to a business’ operation such as potential growth in the market, competition, location, strength, weakness, opportunities and threats. Another important condition influencing the banks is the shape of the overall economy, including interest rate levels, inflation rate, and demand for money. Although these factors are beyond an entrepreneur’s control, they still are an important component in a banker’s decision.

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The higher a smaller business scores on the five C’s, the greater its chances of receiving a loan.



Written by Chukwuma Aguwa

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Personal Finance

Don’t be fooled by COVID-related scams

Always consult the institution in charge of health-related matters to confirm any fishy information you come across.



The nature of and the manifestation of the Covid-19 disease is such that there’s only a little time available to remedy the situation before it gets chronic. Although the infection begins by exhibiting mild symptoms, if you do nothing in a short time, it could lead to death in a matter of days.

This whole picture has caused many to become desperate about Covid-related issues, launching into panic mode at the sight of any information. As a result, such people are not far away from falling for fraudsters.

With the different kinds of news flying around, you mustn’t be fooled by Covid-related scams.

The Coronavirus threatens the health of millions of people around the world daily, also killing thousands along the way. To curb the spread and remedy the situation, bodies like the CDC, WHO, and every country’s local health organisation like the NCDC, frequently circulate information around communities. However, it has also led to fraudsters taking advantage to provide fake news, and even asking for donations.

Each day, there seems to be a new account or NGO asking for donations into the health sector, and though some are legit, many are just fraudsters posing to take advantage of innocent citizens. So far, numerous complaints about scams have been recorded, especially with people who are looking to support the health cause in any way they can.

READ: Africa to spend $9 billion on Covid-19 vaccine, access to supply is big problem

Channels used for COVID-related scams 

There are three major ways scammers take advantage of the haziness of the situation to dupe people. To start with, they appeal to the emotions of humans, who see the high death toll and suffering. As a result of what is happening, people have been willing to donate funds for medical supplies, isolation centres, and financial compensation for medical workers.

Scammers take advantage of this by posing as charity organisations and solicit for funds. Most times, as soon as their target is met, they clear their footprint without leaving a trace behind.

Another way they scam people is by manufacturing and selling fake or low-quality health products. Everyone wants to get their hands on a cure, or something that can at least protect them from the virus, and scammers are meeting their needs by providing just that.

READ: China joins WHO vaccine programme as it fills huge gap left by United States

The World Health Organization currently approves only one vaccine, and any other thing outside it is outrightly fake or just a supplement that will help your body. Currently, only the Pfizer vaccine is clinically tested and approved to work. Be sure to not throw your money in the wind by purchasing some of these fake drugs around.

Lastly, scammers create systems to extract a patient’s personal information, thereby having access to the person’s true identity. It could be in the simple form of opening a registration portal where you supply all your details.

Therefore, only give information to approved bodies and not any random online site that appears legit. These fraudulent individuals can do a lot of damage to your identity. Stay vigilant, only communicate with approved bodies, and always ask questions if you are not sure or suspect foul play.

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The place of electronics in COVID-related scams

These fraudsters usually reach out to you through the digital sphere. Hence, watch out for cold calls, text messages, or emails requesting donations to certain bodies. The best way to confirm the legitimacy of such a message is to visit the organisation’s official website in a different browser. Never follow the link in the mail or text directly, as it can be easily embedded with spyware. Therefore, a single click could see them extract all your personal information, including bank details.


Also, please stay away from those who claim to have a cure, and accompany it with testimonies of people who have used it. They are low graders desperate for your money. Vet them by searching online and see what people are saying. In all, always look out for suspicious messages, and opt out if you are sceptical.

In a nutshell, you should not believe any cure, vaccine or supplement that the World Health Organization does not approve of.

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The government or legit health institutions do not cold call citizens to request donations or coerce them into making one. If you receive a call out of the blues, chances are it’s a scam, which is why they mostly try to hurry you to donate before you realise it. Always consult the institution in charge of health-related matters to confirm any fishy information you come across.

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