Your naira is worth less every month. You feel it at your favourite restaurant when your meal increases from 1,000 naira to 1,500 to 2,000 to 4,000 naira every year. You feel it at the market. You feel it in the “buy now” or you won’t be able to afford it tomorrow. You feel it in the hike in prices because “December is coming” and the refusal of the prices to drop long after December has gone.

And every single time you get your salary, you wonder where your money went. It’s not about how much you earn; it’s about how much you don’t know. 

That’s where financial literacy comes in. Instead of wondering where your money went, you control where it goes. 

 This blog post is a comprehensive guide to financial literacy tailored to Nigerians, packed with practical insights and real-life applications. Whether you’re just starting your financial journey or seeking to improve your money habits, this guide will equip you with the essential knowledge about money in the Nigerian context.

What is Financial Literacy?

Financial literacy is the ability to understand money and its workings, and then put it to good use through a variety of skills:

• Knowing how to earn, how to use what you earned wisely and saving part of the earnings.
• Understanding the cycle of debts, interests and inflation, and how to deal positively with them.
• How to make future decisions. 

You are either controlling your money or it is controlling you. 

Why Financial Literacy Matters In Nigeria

1. High Inflation 

Prices for the basic necessities rise faster than salaries due to inflation. Your rent has added an extra ₦50,000,  but the salary remains the same. Financial literacy is  important to help grow your money faster than prices.  

2. Rising Debt Levels

A loan app gives ₦10,000 but repayment is ₦15,000 in less than two weeks. Many Nigerians are stuck in debt traps. 

3. Limited Access to Pensions or Government Support

More than 90% of informal workers do not have pensions. The majority rely on their children or spouses, work well into old age or resort to begging. 

4. Increased Exposure to Fraud

With more online transactions and less financial literacy, financial scams are not far fetched. Financial literacy bridges this gap. 

Core Elements of Financial Literacy Every Nigerian Should Know

1. Budgeting

You earn a certain amount monthly and think you’re managing okay until you check your account in the middle of the month and you have less than 10% of what you earn left. That’s what life without a budget is. A budget is not a means to punish yourself; it instead tells your every naira what to do. It is a financial blue print. 

Budgeting tips:

• Use the 50-30-20 rule: 50% needs, 30% wants, 20% savings/debt repayment.
• Tools you can employ include; Excel,  Google Sheets, budgeting apps, or even a simple notebook.

Example (₦150,000 income):

• Needs: ₦75,000 (rent, food, transport)
• Wants: ₦45,000 (clothes, data, outings)
• Savings/Debt: ₦30,000

• Adjust as your income or needs change

2. Saving – paying yourself first.

Imagine starting with  ₦1,000 in savings every week. By the year’s end, you’d have over ₦50,000 with apps that give interest. Saving is not about your earning capacity but your ability to keep. 

Tips 

• Save about 10%-20% before spending.
• Automate savings with apps like PiggyVest or Cowrywise
• Start small
• Have an emergency fund
• Have saving goals 

3. Debt Management

Debt in itself is not always bad as painted, but ignorance about debt is.

Good debt: Business loans, education, mortgage
Bad debt: Loan apps with 30–50% monthly interest, borrowing to buy luxury items — borrowing to buy a phone of 120,000 and returning 165,000 to the lender. 

Tips 

• Borrow what you can repay
• Check interest rates and repayment.

4. Credit Score Awareness

This is new to many Nigerians, but it exists. Your credit score shows your loan repayment records and tells lenders if you’re reliable. Lenders use it to decide if you qualify for a business loan, mortgage, contracts, e.t.c.

Tips for a good score

• Quickly repay loans 
• Borrow as little time as possible 
• Use registered lenders approved by the Central Bank of Nigeria (CBN)

You can check your credit score via CRC Credit Bureau or FirstCentral Credit Bureau in Nigeria.

5. Investing – Putting your money to work for you. 

Saving protects money. Investing grows it. Diversify your investments and avoid vague investment schemes.

Nigerian investment options:

• Treasury bills are safe (8–10% returns).
• Mutual funds  from ARM or Stanbic IBTC (from ₦1,000).
• Stocks of Nigerian companies like MTN, Dangote, UBA (via Bamboo, Chaka, Rise).
• Real estate (a long-term investment).
• Cryptocurrency (high risk), invest what you can afford to lose.

6. Retirement Planning

Retirement planning doesn’t start in your 50s; it can start from your late 20s. This might seem far-fetched but hear me out:

₦5,000 monthly invested at 10% annual return:

• From 25 years of age at 50 = ₦6.3m
• Start at 40, and it’s only ₦1.6m.

You can :

• Contribute to a Pension Fund Administrator (PFA) under Nigeria’s National Pension Commission (PenCom)
• Set up voluntary contributions
• Open a personal retirement savings account

7. Insurance Awareness

Insurance protects what you have and what you’ve built. 

Options:

• Health insurance: HMOs like Avon, AXA Mansard, Hygeia (plans from ₦3,000/month).
• Life insurance: supports your family when you’re gone
• Car insurance: protects against accidents and theft
• Business insurance: protects your business from loss or fire

Read: “How to Choose the Right Insurance Policy in Nigeria” for more.

8. Avoiding Financial Scams

From MMM to MBA Forex, Nigerians have lost billions to ignorance and greed through get rich quick schemes. 

Red flags of financial scams:

• It feels and sounds too good to be true. 
• Returns of 30–50% monthly
• No registration or license with SEC or CBN
• Pressure to refer or recruit others
• No clear business model

Protect yourself:

• Verify with the Securities and Exchange Commission (SEC) Nigeria
• Check through reviews patiently
•  Use only licensed financial institutions

How to Improve Your Financial Literacy

• Read through financial blogs and books :
  • The Smart Money Woman by Arese Ugwu, Rich Dad, Poor Dad by Robert Kiyosaki, The Psychology of Money by Morgan Housel, Go through all the write ups on this website. Check other blogs—Nairametrics, Money Africa.
• Take Online Courses
  • Coursera, Udemy, and YouTube have free financial literacy courses.
• Follow certified professional financial experts on social media
• Practice what you learn to  build new habits gradually.

Conclusion

To be financially literate, you do not need to be rich, you need to start.

Face this one minute challenge this week, where you do the following :

• Create a budget this week through an app or in a notebook. 
• Save ₦1,000 this week.
• Check your credit score.
• Read one chapter of a finance book.
• Read a financial article on this blog every week. 

A financially literate Nigeria is a wealthier Nigeria.