As a Nigerian in your 20s, you may be a fresh graduate from the university, an entrepreneur just starting out, a serving youth corps member/ newly discharged from the National youth Service corps; An employee working at your first real job, or you just landed your dream job. Quite possibly too, you might not belong to any of the categories above.
Nevertheless, we all have one thing in common; Our struggle for financial independence. For some, this struggle began quite early, therefore they were able to learn a number of financial skills to survive. While for others, the desire to attain financial independence awoke after the allowances stopped coming in.
Whether it is the latter that describes you well, or the former; We can all agree that it is time to start getting serious about earning money and most importantly, managing it. The following are finance tips every Nigerian in their 20s should know.
TIP NO. 1 – LEARN FINANCIAL LITERACY
Financial literacy, as defined in Investopedia is the ability to understand and properly apply financial management skills. A person who is financially literate knows not to overlook proper financial planning; Understands compound interest and the time value of money. Managing money becomes pretty easy when you take the time to educate yourself.
Will Kenton, Author of financial literacy wrote; The main steps to achieving financial literacy include learning the skills to create a budget, the ability to track spending, learning the techniques to pay off debt, and effectively planning for retirement.
Pardon me, if all of these seem a little overwhelming. You can however begin by reading books on financial literacy and be intentional about it because the most relevant aspect to becoming financially literate is simply by doing.
TIP NO. 2 – BUILD YOUR EMERGENCY FUND
In case you haven’t started already, setting up an emergency fund will help cushion the effects of a number of unpleasant surprises that might get thrown at you later; Whether you lose your source of income, you or a loved one falls sick or you suddenly need to rent your own place. Allotting three – six month’s worth of net income to your emergency funds is a good place to start.
TIP NO. 3 – BECOME KNOWLEDGABLE ABOUT INVESTING
Many young Nigerians still believe investment is something one should start thinking of in their 40s or after they have reached certain developmental milestones such as getting married and starting a family.
The truth however is that investing while you are still young puts you in a better position to take advantage of high risk but profitable investment portfolios such as stocks, this way you will have the time to ride out the ups and downs of the stock market. A study showed that if you started investing at age forty, you’ll need to invest eight times as much as someone who started in their 20s in order to close the gap.
Not sure where to start? Read HOW TO START INVESTING; A GUIDE FOR BEGINNERS
TIP NO. 4 – STOP MAKING EXCUSES FOR YOUR BAD SPENDING HABITS
“YOLO” is perhaps the commonest excuse to justify habits such as gambling, philandering, alcohol addiction, to mention the least. But I am here to tell you that you will die broke! If you do not stop. Being a Nigerian in your 20s, your biggest concern ought to be ways you can expand your streams of income (see tip no.5) and keep it around for longer.
You may like: MORE TIPS ON HOW TO MAKE YOUR SALARY LAST LONGER
TIP NO. 5 – CREATE MULTIPLE STREAMS OF INCOME
Lastly, do not make the mistake of getting too comfortable at your full time job, hence you might grow complacent about exploring other means of generating income, especially passive income.
Creating multiple streams of income is not as difficult as many think it is, in fact there are at least 7 different streams of income to choose from. They include, earned income, profit income, interest income, dividend income, rental income, capital gains, royalty income. If you wish to explore any of these sources of income, read 7 Income Streams of most millionaires.
Which of these tips are you keen on using? Kindly share in the comments.
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