Forbes last year reported that 11% of billionaires dropped out of the ranks. A
record 994 or 46%, became poorer (relatively speaking) than they were last
year; the most since 2009. This occurred at the height of the global financial
crisis. Contrary to popular opinion, however, some people are losing their
wealth. There are currently, 2,153 billionaires in the world.
Wrong investment options
The benefits of investments cannot be overemphasized. Investments are indeed
the true store of wealth.
Financial literacy is the process of understanding all aspects of money, such as
taxes, savings, bills, retirement, budgeting, paying for school, and especially
investing. Investments should be kept simple. Once you cannot understand the
guiding principles of an investment, it is best you stay clear of it. What would it
profit you if after a contracted amount of years you end up with a deficit in your
investment as opposed to profit?
The need for a Financial Advisor is thus brought to the fore in order to provide
insight into building wealth by constructing a portfolio of investments that are
well suited to the client’s risk attitude.
Improper budget planning
How much money will I earn and when will it be enough? Are my living expenses
within my means or am I ‘just’ going after a certain lifestyle by buying more
luxury than I can afford?
The only appropriate time you should be able to buy something is when you do
not feel any remorse after spending on it. For example, just as you purchase ice
cream without it having any adverse effect on your account, this should also be
the case when you’re purchasing a car or any other thing, which is not an asset.
Since budgeting allows you to create a spending plan for your money, it ensures
that you will always have enough money for the things you need and the things
that are important to you. Following a budget or spending plan will also keep
you out of debt.
Lack of savings
Do you know that saving psychologically affects you by allowing you to have the
mental freedom to know that you won’t have to sell your property because you
lost a job or went through a phase while growing your business or changing
A simple formula works whilst saving – always save in trickles!
Below is a sample template on how to save seamlessly.
|Income (Monthly)||N250, 000|
|Personal salary||N25, 000|
Savings is the easiest part to achieving financial independence. All what is
needed is to have a reasonably diversified portfolio, keep it simple and stick with
it. Always remember that once an adequate emergency fund is established,
savings can provide the “seed money” for higher-yielding investments such as
stocks, bonds, and mutual funds.
Re-examine your existing financial plan, if it doesn’t make financial sense for the
current year, make time to develop a sound financial plan a monthly priority.
And, never forget that for every kobo spent there is one that is not available for