Introduction

You earn 200,000 naira but by the 15th of the month, you have borrowed 15,000 naira from a colleague to transport yourself to work and you wonder, “where does my money go?” Sounds familiar? This is the reality of a lot of Nigerians. Stable paycheck,Excessive hustle, but always broke and falling into debt traps. According to the Enhancing Financial Innovation & Access (EFInA), more than 71% of Nigerians do not have savings. 

 Why?

It’s not always about how much is earned, but the mistakes made with how much we earn. Fortunately, these costly mistakes are avoidable and in this guide we’ll be exploring the top 10 money mistakes Nigerians make. 

1. Living Beyond Your Means

(The office worker taking loans to switch from iPhone 16 to the newly released iPhone 17 pro max)

Many Nigerians spend more than they earn. From our culture of lavish parties to buying trendy gadgets, and the tendency to spend to impress and show off. This leads to:

• Debt traps, cycles and accumulations. 
• Inability to save due to debt repayments.
• Financial stress

To Avoid stories that touch: 

• Create a realistic monthly budget and stick to it.
• Separate your needs ( food, transportation, rent) from wants (aso-ebi, sneakers…)
• Avoid competition, let it be the drive instead. 

2. Not Saving Consistently

“I’ll save when I get an increase”, “I’ll save when I earn more”, “I’ll save later”. Did you👀?

Savings is about discipline. If you don’t save at 1000, you won’t save at 10000.

Don’t wait for later as things will always change. Keep saving so your lifestyle rises to your income level. 

Measures:

• Start saving no matter how small, ₦500 weekly equals ₦26,000 yearly. 
• Save first, spend what’s left. 
• Automate savings with apps PiggyVest, Cowrywise, or Kuda.

3. Depending on A Source of Income

The Mistake:

Relying on a single job, salary, or business, and most times without even insurance. 

Tip: 

• Diversify  into low risk options like Agriculture, rentals or affiliate marketing.
•  Learn skills, digital and creative like writing, design…

4. Living Without Budgeting or Expenses Tracking

The Mistake:

The micro spendings, “small small” cash transfers to snacks, drinks, transport. A thousand naira every day on snacking will amount to thirty thousand after a month. 

Without tracking, you might end up spending more than you think. 

Better measures; 

• Use a budgeting app, notebook, or Excel sheet to track all spending.
• Review expenses weekly or monthly consistently to check for leaks. 

5. Borrowing for the Unproductive Reasons

The Mistake:

Loans should help improve your wealth, not return you to “square one”. Borrowing loans for things without yield — depreciating gadgets, expensive outfits, high class dinner dates is financial suicide. Some loans even come with interest. You get the gist? 

How to Avoid It:

• Borrow for reasonable reasons (e.g., business, education).
• Avoid loan apps that seem too good to be true. 
• Understand loan terms and if possible get legal agreements before borrowing huge sums. 

6. Insurance Apathy

The Mistake:

Insurance is not for the rich alone. Insurers have plans for everyone. Without insurance, a single unforeseen or even seen circumstance, can bring down one’s entire savings. 

Measures: 

• Get affordable health insurance (e.g., through NHIS or HMO plans).
• Insure whatever is in your capacity to insure. 
• Explore microinsurance options made for low-income earners.

7. Falling for Get-Rich-Quick Schemes

MMM, Forex, Loom, MBA crashes. Remember? A lot of people lost their means of livelihood 

From chasing unrealistic, “too good to be true” profits, a lot of Nigerians have lost money to fake investment platforms, scammers and Ponzi schemes. Nigeria as a country has lost billions to scammers. 

To avoid falling for scammers:

• Sounds too good to be true? Walk away, because it probably is.
• Verify investment platforms with SEC Nigeria or NAICOM.
• Invest in stocks and bonds.

8. No Emergency Fund

The debt traps and debt recycling often leave no room for emergency fund savings, but still emergencies happen everyday. These force people with no plan to resort to borrowing, selling important assets or making risky decisions. 

• Save into a separate account.
• Start small.
• Make sure the account is not as accessible.
• Save for about 3-6 months of expenses. 

9. No Financial Plan

The Mistake:

Many people live only for the day. Without any form of fall back plan. It might be difficult but it is always worth it in the long run. Wealth, housing, retirement, education for the kids. You do not want to risk working into old age, being a dependent, or ending up struggling.

In avoiding this:

• Set clear short, medium, and long-term financial goals. 
• Look in pension plans, education savings, and retirement accounts.

10. Financial illiteracy 

Money isn’t really taught in schools as it should be, and many do not want to put in the work to self educate about budgeting, saving, investing, insurance or debt management.

To avoid such:

• Read finance blogs like this one, YouTube videos, books and podcasts. 
• Join financial literacy programs or webinars.
• Teach your children about money early to break the cycle.

Extra Nugget To Separate wants from needs

• Pause before buying: Do I really need this right now?
• Practice delayed gratification.
• Prioritize what truly improves your life, not just your image.

Final Thoughts

The way to financial freedom is firstly awareness, acknowledgment and discipline. Financial mistakes are not permanent and can be learnt on the job. Here’s a quick recap of the top mistakes to avoid:

• Living beyond your means
• Not saving consistently
• Relying on one income source
• Not budgeting
• Borrowing recklessly
• Ignoring insurance
• Falling for scams
• No emergency fund
• No long-term plan
• Financial illiteracy

Settle on a mistake you’re guilty of and try to fix it. You do not need to follow all advice, rather go along with the one tailored to your situation.