ACHIEVING YOUR FINANCIAL GOALS.

Earning a salary isn’t enough in your journey to financial freedom. Every project needs a plan; your financial goals also needs a concrete plan. If you want to fully realise your vision for your financial plan, you need to map out a plan to make that happen. This includes setting goals that identify and establishes your priorities.

Your financial goals on an upward growth scale

In order to achieve financial independence, earning a salary isn’t enough. Every endeavor necessitates a strategy, and your financial plan is no exception. If you want to completely fulfill your financial goals, you’ll need to create a plan to get there. Setting goals that identify and establish your priorities is part of this process. After payday, it’s common for people to need to settle their bills. But how often have you sat down to thoroughly predict your future earnings long-term?

You have to set some financial goals if you want to take charge of your money and live a more financially secure life. Not only setting these goals, but you also have to put in measures to achieve them. Financial goals assist you in making sound financial decisions, directing your spending, and reducing resource waste.

Your financial objectives may be short-term, ranging from one month to two years; they are targets that you can reach in a short period of time. Long-term objectives are similar to short-term objectives in that they require 5 to 20 years to attain. They are the most important goals for you, and they will take the most time and commitment to achieve.

5 STEPS TO ACHIEVING YOUR FINANCIAL GOALS

  1. Write it down: 

As Michael Korda wrote, ‘write it down. Written goals have a way of transforming wishes into wants; can’t into can, dreams into plans; and plans into reality. Don’t just think it- ink it’. 

You may have wished to save more money at the end of the year, but writing it down just adds another dynamic to your wish. Be specific with the details and action. If you want to have N1, 000,000 in savings at the end of the year. Be specific about your targets, and include the sub-metrics necessary for achieving that goal.
Putting your goals in writing causes you to be more focused and clearer. Those goals become tangible, and you also have a visual cue of them in your head. The first step to achieving any goal in life is to write it down. 

YOUR Goals must be SMART:

Your goals also have to be SMART; Instead of saying ‘I want to have plenty of money in my savings at the end of the year, write instead í will have saved N15,000,000 before 31st of December, 2022 by saving N2,000,000 every month through the end of the year’. The difference between the two statements is that the latter is SMART, while the former is not. The latter one is time-framed; there is a specific date that the goal must be attained, it is specific; the total amount to be saved each month, and also the total amount that must have been saved before the time was also stated. Likewise, your financial plan should be specific, measurable, attainable, relevant, and time-bound.  

Develop healthy financial habits:

As Jim Rohn wrote, ‘motivation is what gets you started, habit is what keeps you going.’ It is therefore important that you create habits that help you consistently stick to your financial goals. Unhealthy habits can throw you off course. So the only way to remain true to your financial project is to develop habits that align with your target. Some of the financial habits that you can adopt may include: 

  • To guide your spending, make a daily or monthly budget and stick to it.
  • Distinguish between wants and needs, and prioritise them. 
  • Engage in more productive financial conversations with people around you.
  • Reinforce your financial mindset by changing how you think about money. 
  • Eat fewer junks and cook more. 

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WHY FINTECH IS THE KEY TO FINANCIAL INCLUSION

The World Bank Group considers financial inclusion a key enabler to reduce extreme poverty and boost shared prosperity. Fintech is key to financial inclusion which will open up banking services to all and sundry. Fintech has the potential to make banking services more accessible to those who would otherwise not have access to them. It can help to reduce the cost of financial transactions. It makes it easier to access credit, savings and other financial services.

The primary goal of financial inclusion is to ensure that unbanked and underserved individuals and communities have access to useful and affordable financial products and services that meet their needs –payments, collections, credit, savings and insurance – delivered in a sustainable and responsible way.

A look at the opportunities for financial inclusion

Financial inclusion is essential to the community’s progress as access to monetary touchpoints facilitates day-to-day living, and helps families and businesses plan for everything from short-term goals to long-term goals and unexpected emergencies. As account holders, people are more likely to access other financial services, such as credit and insurance. This is to start and expand businesses, invest in education or health, manage business risk, and weather economic shocks. This can improve their lives.

In Nigeria, financial inclusion has spread across Nigeria over the past few years. This includes job creation, Foreign Direct Investment, private sector innovation, and a push to open low-cost accounts, including mobile wallets and digitally-enabled payments.

Impact of Financial Inclusion on the Nigerian Economy in the Last Five Years

Employment: The World Bank Group considers financial inclusion a key enabler to reduce extreme poverty and boost shared prosperity. This view can be deemed credible based on its effect on the Nigerian economy. According to the Shared Agent Network Expansion Facility (SANEF) there are 1.4M number of financial access points/Agents nationwide. This translates into employment opportunities for over 300,000 Nigerians (excludes operators – MMOs and Super Agent employees). The employment opportunity covers a wide mix of agents, agent aggregators, agent shop handlers, licensed MMOs and their employees as well as licensed Super Agents and their employees.

Financial service touchpoints: To bridge the gap between unbanked citizens and financial services, financial service touchpoints are important. Financial Inclusion has brought to fruition the availability of financial services touchpoints in areas/locations previously unreached and deemed under-served communities. There has been growth in the number of agent touchpoints and volume of banking inclusion services such as POS cash out, G2P Disbursements and payments (e.g. Tradermoni, GEEP etc.), funds transfer and wallet creation in under-served or rural communities. These have improved these communities’ economic development.

As a result, investment in advertising and brand identity has increased. The huge investment in this area has created an avenue for state governments to earn internally generated revenue from operators and agents alike. However, this poses a disincentive for Super Agents & operators as it impacts startup capital and agents’ available trading capital respectively.

Foreign Direct Investment (FDI):

There is growing evidence that inclusive financial sector development can reduce poverty and inequality. When previously unbanked citizens save and

By mobilizing these savings for investments, banks and other financial institutions mobilize these savings for investments that, in turn, help grow the country’s productive sector and spur foreign businesses. In addition, Nigerian Fintechs in the digital financial services space have received multiple rounds of funding and seed capital through foreign direct investments. This has been done by donors and investors across the globe in the past five years.

International donor organisations e.g. Bill and Melinda Gates Foundation also drive Foreign Direct Investment through their partnership with EFInA to sponsor projects on raising financial inclusion rates across the country.

All these highlight the potential and need for a wider-scale promotion of financial inclusion for Nigerian society.

Financial inclusion is key to providing financial services to the unbanked.

Harnessing the Buying Power of the Financially Excluded

Financial inclusion has as much potential to help financial institutions lend to even poorer communities and reach rural clients. This is as they do to help commercial banks reach the lower middle class.

Only 40.1 million of the adult population have no access to formal or informal financial services. Mobile money uptake and awareness in Nigeria remain low at about 1% and 16% respectively. In addition, EFInA Access to Financial Services in Nigeria 2018 Survey highlighted that out of the 100M bankable adult population in Nigeria, 39.7 have bank accounts, 8% have formal sector employment, 16.7% own business (non-farming), 11.2% own business (farming), 23.4% rely mainly on farming for income and about 53.4% save regularly.

Based on this data, we can broaden our understanding of the population of adults who do not have access to any financial service (formal or informal) in Nigeria, their savings and credit patterns, remittance behaviours, payment channels and their potential to use formal financial services to manage their finances.

We can say that the financially excluded have enormous buying power. Based on economic and social metrics, transactions from this segment are low value and high volume.

Harnessing buying power of the unbanked

Deployment of products & services that meet the lifestyle of the unbanked and rural dwellers: Despite limited access to banking services, Nigerians have long practised traditional

This unbanked sector also relies on micro-loan services from credit associations that serve their interests. By offering access to the financially excluded, they have additional access to a wider range of services. This can boost the collective standard of living in those rural communities. This can improve financial literacy and awareness.

Retail-based pricing considerations: Inefficient pricing isolates consumers who would otherwise sign up for a product or service. This is especially true for the financially disadvantaged who earn below minimum wage. By ensuring retail prices for financial services and other products are pocket-friendly, it would encourage customer loyalty and repeated use of the available services.

Deployment of Technology-driven Solutions:

As history has shown, technological innovations are one of the major drivers of economic adoption. For example, USSD is a mobile-based service that requires no onboarding for users and has gained widespread adoption. USSD offers the best available communications technology to deliver mobile financial services to low-income customers. This shows how technological adoption drives financial inclusion.

In addition, research from other countries where mobile money adoption is high has shown a positive correlation between increasing mobile money adoption and significant levels of formal financial inclusion. In Nigeria where the financially excluded population remains high at 40.1 million adults, an expansion of mobile money adoption and usage in the country presents a real opportunity to provide the poor with access to financial services as well as other social benefits and services.

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BUDGETING FOR BEGINNERS

a picture showing budgeting as a means to success

INTRODUCTION TO BUDGETING

Budgeting is the first step to financial success. Oftentimes, we’ve heard people talk about how a certain commodity isn’t in their budget, and so they can’t afford to buy it. This drives the quest to fully grasp the concept of this economic terminology. Every individual’s goal is to be able to afford whatever he wants. In understanding people’s attitudes toward financial goals, the following assumptions about humans are true. This general attitude guides their approach to making and spending money.

ASSUMPTIONS THAT AFFECTS BUDGETING

  1. That man is a rational and social being. This indicates that humans possess the mental capacity to reason and think, which enables us to perform a variety of cognitive tasks such as concept formulation, assessment of ideas, and reasoning. 
  2. A need is a requirement for functioning and existing. Wants are anything that enhances the quality of your life.
  3. A person’s income must be greater than his expenses. If the reverse is the case, it is highly detrimental to the financial well-being of the individual.   
  4. A person must instill healthy habits to get the best out of budgeting.

PERSONAL INCOME VS EXPENSES IN BUDGETING

This concept of personal income can be defined as all the earnings an individual makes over a period of time. Personal income comes from salaries, investments, and other assets the individual has acquired over time. Income generally refers to the value or sum an individual and business earn in exchange for their labor and goods.

There are basic expenses that an individual must pay at all times, and these are called cost of living expenses. The cost of living expenses might differ from person to person depending on lifestyle, choices, and family size. The common cost of living expenses includes feeding, rent, clothing, taxes, education, transportation, etc. 

To further break these two concepts into bits, income is money coming in, and expenses are money going out. Every individual’s goal should therefore be to maximize income while minimizing expenditure. Understanding these two concepts helps individuals project their financial standing and plan toward their goals.

WHY DO I NEED TO PLAN MY   FINANCE? 

Personal finance is mostly relative to the individual’s mindset, choices, and lifestyle. Certain individuals have no financial projections, nor do they have goals.  Having a financial plan is just like intending to have a fit body, and then taking steps to cut down on unnecessary junk food and registering at the local gym. In the same way, you plan for your social lifestyle, and physical body, this same energy should be directed toward your finances. 

Financial planning is a methodical process whereby a person makes the most of their financial resources by managing their money wisely to best meet their financial goals and objectives. We all know the health implications of eating too much, so we pay attention to what we eat and how we eat it. Likewise, you should also pay attention to the implications of spending more than you earn. A financial heart attack, including debt, bankruptcy, and a lifetime of bad credit, may result from continuously spending more than you make. A personal financial plan functions as a financial diet plan.

WHAT THEN IS BUDGETING?

A budget is an economic concept; governments, companies, and individuals use budgets to estimate their income and outlays for a given period. Budgets are essentially plans for a specific period and are known to increase the success of any financial endeavor significantly. 

The objective of a personal budget is to minimize expenses and maximize savings. You can use the additional money you save by reducing your less-needed expenditure and raising your savings rate toward significant long-term financial objectives. Budgeting is essential if you want to control your spending, be ready for unforeseen circumstances, and be able to afford your needs without falling into debt. It doesn’t have to be tedious, you don’t have to be brilliant at arithmetic, and keeping track of your income and expenses doesn’t mean you can’t buy items that you want. It simply means that you will be more aware of where your money is going and that you will be more in control of your finances. 

The concept of budgeting is not to make you feel bad after spending. The goal of budgeting is to ensure you can save some money each month, ideally at least 10% of your total income, or at the very least, to ensure you are not spending more than you bring in.

. To successfully create a personal budget, you must first meticulously track your income and expenses. Making a budget is simple once you keep track of your money. Your expenditure is far more difficult to identify or track. You may start the crucial process of classifying all your income and spending once you have a complete list of all your bank deposits, outgoing checks, and transfers.

Having the right attitude toward money is the backbone of having a budget. 

CREATING A BUDGET

The following steps will take you to a healthy financial budget   

  • FIGURE OUT YOUR NET INCOME:

Your net income serves as the cornerstone of an efficient budget. Your take-home pay is the sum of your income less tax, including other benefits. Focusing on your gross pay instead of your net pay may cause you to overspend because you will believe you have more money accessible than you have. Keep thorough records of your contracts, and compensations if you are a contractor or a freelancer to manage erratic revenue. 

  • ANALYSE YOUR SPENDINGS

Finding out where your money is going comes after determining how much money you make. This will help you cut costs by keeping track of and classifying your expenses. List your fixed expenses first. These are typical monthly expenses like utility bills, rent, and so forth. Next, make a list of your variable expenses, which include things like groceries, transportation, and feeding, among others, and could differ from month to month.

  • SET SENSIBLE OBJECTIVES: 

Make a list of short-term and long-term financial goals. Short-term goals which can be completed in one to three years might include actions like creating an emergency fund or reducing debts. Long-term goals take years to accomplish. Although your goals don’t have to be unchangeable, knowing what they are can inspire you to keep to your budget. For instance, if you know you are saving for a vacation, it might be simpler to reduce spending.    

Plan

The difference between what you spend and what you wish to spend is where everything comes together. To estimate your spending over the next few months, use the list of variable and fixed expenses that you have established. Contrast it with your net income.  Consider creating direct and clear spending limits on each category.

You could decide to further segment your spending by dividing it into wants and needs. For example, petrol is considered a need if you will commute to work in your car every day. On the other hand, an online movie subscription might be considered a want. When you’re looking for strategies to reroute money toward your financial goals. This distinction becomes crucial.   

  • REVIEW YOUR BUDGET FROM TIME TO TIME:

All items in your budget may not be certain. For example, your expenses might change, you might get a salary increment, and you might reach a goal and want to set a new goal. Whatever the reason is, establish the practice of routinely reviewing your budget by using the preceding procedures. 

Conclusion

Knowing your monthly income and expenses will help you to endure that your money is being used for the best. A budget can help people who have a good salary and enough money left over after paying all expenses to maximize their savings and investments.

Any budget should concentrate on identifying and categorizing all expenses that happen during the month, quarter, and year if one’s monthly expenses normally absorb the majority of net income.

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