August 18, 2016

See The Things That Can Get You Into Financial Trouble Today

by Ugodre Obi-Chukwu
Nigeria is right about neck-deep in a pit of recession. Interest rates are on the rise, jobs are being lost and the Federal Government is broke. It’s a tough ordeal for everyone including policymakers and the government. Even the rich are feeling the heat as they see the value of their investments plummet.

Some people are however between a rock and a hard place and they probably do not know it yet. We believe that the earlier you find out or understand how precarious your situation is, the better for you. You can fix a bad situation by first acknowledging how bad it is and what can be done to remedy it.

How people are being financially screwed today:

Here is what we think...
You don’t have savings or investments
Earning a kobo in this tough economy has never been harder. People who even earn are struggling to keep up with their financial obligation as inflation keeps eating away any ounce of purchasing power that they get.

Nevertheless, those who have savings or investments have a fall back option. With savings, there is cash you can fall back on when you need to augment income in times of urgent need. Investments on the other hand help you guard against inflation while earning you a decent return to get through rising financial obligations. If you don’t have savings or investments in this economy, then consider doing so or you might get screwed.

You have a lot of uncontrollable debts
Debts are a necessary evil which we all need to fund our insatiable lifestyles or business interests. The downside of debts is that during a recession, its one burden that can quickly sink you. People in debts are so screwed they barely have enough of their income to cater to their immediate need. This is why they end up defaulting on the debts leading into even more debts and mental torture. If you have uncontrollable debts, then you are quite screwed.

Your job is easily dispensable
Sure they say no one is indispensable but not everyone is equally dispensable. Some jobs are far more important than others which make evaluating your current role at work very important. If you currently have a job role accountability that is not critical to the financial or commercial success of your workplace, then you should be indeed worried and need to do something about it. Recessions are predominant with job losses and employers like to use that opportunity to weed out “chaff”. You don’t want to be the chaff my friend or you’re screwed.

You have no pensions
Not a lot of people believe in pensions let alone contributing to a fund. Pension funds are designed to support you in the rainy days when you are out of jobs or have been forcefully retired. It’s not revered in Nigeria because everyone just wants to spend the money they earn today rather than saving it for the rainy day. In Nigeria, a salary earner is entitled to about 25 per cent of his pension when he is sacked or retired. That can be a windfall in the time of need. Not having it is setting yourself up for being screwed.

You have no insurance
Insurance is not also popular in Nigeria. Some don’t even bother with comprehensive vehicle insurance that you’d think is a no-brainer. If you had insurance products such as life insurance, vehicle insurance, property insurance etc. then that’s one major risk hedged for you. It’s a chunk taken out of your salary or income periodically but the upsides are huge when trouble comes your way.

You have a recurrent forex obligation but have no forex inflow
Not in this economy that we all know is not nice to the naira. Having a forex obligation can be a pain in the butt especially if you do not have a commensurate forex income. The implication is that you keep getting entangled in a wave of forex deprivation and capital erosion. A friend recently had to sell off his land just to be able to afford ticket and school fees for his kid. He admits he is getting screwed and needs to address his funding mix asap.

You owe your children’s school fees, landlord etc.
Some people are currently so broke they can’t even afford their children’s school fees. And we are not talking about school fees abroad but locally. That’s one of the highest forms of pressure you can ever face as a parent. The other major pressure you can face is not having money when your rent is due. Landlords are not smiling as they also face the same economic pressure that you are under.

You only have one source of income
Depending on how small or huge your income is, you could be potentially screwed up by having just one source of income. Those who earn fat salaries relative to their expenses can cope but not when your salary is thin and you have increasing expenses. It’s either you cut down or you’re screwed.

- Ugodre Obi-Chukwu

8 comments:

Harbolarkale Niyi said...

I sincerely agreed with the writer

Hassan Aderemi said...

Articulated points.

Jeff Kingsley Jr said...

So true

olutoscene1 said...

noted!

#Olu, can you see?

Dididjon Paul said...

Sir you are on the point.

SPACO said...

Nice one.

inumidun said...

Well said..

samaila sulaiman said...

Nice one