Honestly, financial education is so important!
You really don’t have to study finance in school before you become prudent or financially intelligent. I studied Education and Chemistry yeah and all that I know and will be sharing with you are things that I learnt through reading books and self-development. I’m not perfect, I’m far from it honestly but I think deeply before I spend any kobo. I ask myself; is it a want or a need? Am I acquiring an asset or a liability? Is this money risk I’m about to make worth it or not?
In my last blog post I gave an intro on how I came across a book that changed my financial orientation and how I’ve grown to be financially intelligent in the last three years. I titled this post Money Lessons 1 because I honestly can’t do justice to everything I’ve learnt in just one post and so we’d be having Money Lessons 2. Oh yesss, my dear reader how are you? I hope you’re staying safe.
In lay man terms, an asset is any thing that puts more money in your account whether short term or long term while a liability is any thing that takes money away from your account! An asset will help you generate a future income e.g.buying a land or even a gold chain that you could sell off later and make more money. Anytime you’re about to spend your money on anything especially things that you know are expensive, ask yourself this question “does this thing have value and would it appreciate over time?”. If the answer is no,then maybe you should have a rethink. There are some things that are actually expensive and won’t appreciate over time but are very essential for your productivity e.g. a web developer might have to buy a MacBook because of some features it has that would make his/her work more efficient, we all know that you can’t sell a MacBook after a while and make more money but for that tech guru it’s an asset because it helps him/her to be more productive and hence make more money. It’s a different case when someone else buys a MacBook because he/she wants to flaunt; you know that “I’ve arrived” syndrome, so this brings us to knowing the difference between needs and wants.
A need is something that is actually very essential, something that is necessary for your survival or productivity e.g. food, shelter, clothing, access to the internet, etc. Buying expensive food from restaurants or Instagram vendors every day is not a“need”, you wouldn’t die if you don’t eat out or order in meals; remember what your mum used to say when you were younger “there’s rice at home!”. It’s perfectly fine if you go out with your friends to celebrate milestones, birthdays, etc. I personally love going out and all that stuff but what I would not do is go to restaurants that are way beyond my budget or turn it to a daily routine. In my opinion, homemade meals are healthier and less expensive so buying expensive meals everyday ko neccesstrii my dear.
There was a point in my life where I bought scarfs every month; different colours and designs, sometimes I even buy the same colour (pink) because it’s my favourite and the sad part is that I just end up decorating my wardrobe with them, I keep using black scarfs for 80% of my outfits. I just look back now and think to myself that all the money I had spent buying those scarfs that I didn’t even need could have been used to buy something else that had value e.g. a gold hand chain. The scarfs and the gold hand chain are both fashion items yeahh but one has value while the other does not. The unnecessary buying of scarfs every month was a “want” and not a “need”.
Now black tax, the Chapter 2 of the book Smart Money Tribe is titled “Financial Abuse is a Thing”. It talks extensively about how some family members, friends, acquaintances just come from nowhere to extort you and bring all their money problems to you. So many people work hard and earn so much money but are over burdened by responsibilities from family members (most times not even immediate family members). It’s a different thing when you help a relative to pay for his/her need (education, starting up a business, hospital bills, etc.) and not when they make it seem like you’re entitled to pay for their wants and cater for their expensive lifestyles. Always have a budget for the amount of money you can spare to assist family and friends and ensure not to exceed it, you also have to bear in mind that your own bills and necessities should not be affected. Please this doesn’t make you selfish, you just have to be careful when making money decisions and not end up being the “Father Christmas”.
Oh my, it’s been a long read I must confess but I hope you’ve learnt one or two money lessons from this post, please drop your comments in the comment section and subscribe here to get notifications every time I publish a new post. In my next post I’d be sharing lessons on love and money and investing in your friendship circle. Till then, stay safe and think deeply before spending a dime!
Lots of love,