The Finance Team welcomes you again to this edition of the SFCN Newsletter. In the next few lines, we intend to share with you some basic insights on the subject of Personal Financing.
1. What is Personal Finance?
Process of planning and managing one’s personal ﬁnancial activities from budgeting, savings, spending and investing one’s resources
2. Objectives of Personal Finance
a. Achievement of ﬁnancial goals
b. Become ﬁnancially independent i.e. having enough income to pay for one’s reasonable living expenses for the rest of one’s life without having to rely on formal employment.
c. Live a peaceful retirement life.
3. Misconceptions of Personal Finance
a. Only wealthy people need it
b. I am too young to worry about it
c. I am not earning enough now.
d. I have my Pension to fall back on.
4. Personal Finance Tips
a. Set your personal ﬁnancial goal(s)
Endeavour to answer the following questions (Psalm20:4):
i. Where do you envision your ﬁnances in the short to medium term?
ii. What am I saving for?
b. Develop your strategy and tactics to achieve the goal – Be ready to sacriﬁce, take risks (act/work) and have faith in God.
i Plan your income and expenditure; understand your sources of income and prioritize your expenditures;
ii. Write it down, make it plain and run with it(Hab2:2;Luke14:28)
iii. There are several apps/tools/excel templates that can help in developing a budget
d. Be Disciplined. Cut oﬀ unnecessary expenses.
e. Invest: Do not despise the days of little beginnings; start small, think big! Make sure that at least 10% of your income goes into investments.
f. Pay your debts/loans: Try to pay more than the minimum repayment amount and ensure you keep your integrity by paying back as and when due
g. Proactively Plan your estate: Write a will without which the Government will take at least 10% of estate.
h. Get Insurance (especially on your priced assets)–Transfer the risk
I. Consult the Professionals; Reputable Asset Management / Stockbroking ﬁrms.
5. Types of Investments
a. Short Term Fixed Investments – Investment with maturity period of one year or less with Principal and Interest are paid at maturity.
b. Mutual Funds – Pool of funds managed by professional Asset Managers; minimum investment as low as N5,000
c. Treasury Bills / Commercial Papers – Short Term Instruments (maturity of one year or less). Treasury Bills are Government backed and highly secure whilst Commercial Papers need to be vetted by Professionals before taking investment decision.
d. FGN Saving Bonds – Government backed Debt Instrument. Minimum subscription is N5,000.
e. Eurobonds – Dollar denominated investment which can help hedge the devaluation of Naira
f. Equities – Shares in companies within and outside Nigeria; yes, invest in shares oﬀshore but contact a Financial Advisor and do your research properly.
g. Real Estate
6. Smart Cashﬂow habits
a. Avoid impulse buying – Practice delayed gratiﬁcation
b. Don’t spend what you have not earned
c. Ensure you have your Emergency Fund– Save for the rainy day
d. Don’t buy what you do not need – “Want” is not “Need”.
e. Don’t live to impress people – Spend wisely
f. Scrutinize your bank statement – Unauthorized debits happen.