Financial freedom is available to those who learn about it and work for it. – Robert Kiyosaki

Financial freedom refers to a state in which an individual has sufficient personal wealth to live without having to actively work for their basic needs or financial obligations. It’s a goal many people strive for, as it enables them to make choices about how they spend their time, rather than feeling compelled to work to maintain their lifestyle. Achieving financial freedom is about more than just being “rich”—it’s about having the resources and financial security to live life on your own terms, without worrying about running out of money.

However, a significant number of people face financial difficulties and in Nigeria, like in many other countries, financial mistakes can significantly impact an individual’s economic well-being. In this article, we have identified five of these mistakes. Let’s get into it.

Lack of a Budget

Many Nigerians do not create or follow a budget, leading to poor financial planning. Without a budget, it’s easy to overspend and lose track of where money is going, which can result in financial strain and an inability to save or invest effectively. A budget is essential to help avoid wasteful spending ensuring that essential needs such as food, housing, and utilities are prioritised.

Inadequate Savings

A significant number of Nigerians do not prioritise saving. Whether it’s due to low income, high expenses, or simply a lack of financial discipline, inadequate savings can leave people vulnerable to emergencies and unable to take advantage of investment opportunities.

Over-Reliance on Debt

Excessive borrowing, especially through high-interest loans, is a common financial mistake. Many people rely on personal loans, credit facilities, or even informal borrowing (e.g., from friends or loan sharks) to cover basic expenses or maintain a lifestyle beyond their means, leading to a debt trap. This can also lead to a debt cycle where individuals are constantly borrowing to repay previous loans or to meet basic needs, worsening their financial situation.

Poor Investment Decisions

Lack of financial literacy often leads to poor investment choices. Many Nigerians fall victim to get-rich-quick schemes, fraudulent investments, or put money into ventures they do not fully understand, leading to significant financial losses.

Neglecting Insurance

Insurance plays a crucial role in protecting individuals and businesses from financial losses. However, the average Nigerian does not fully appreciate its significance. Many overlook the importance of insurance, whether its health, life, or property insurance. This neglect can result in severe financial strain when unforeseen events occur, such as medical emergencies, accidents, or natural disasters, forcing them to pay out of pocket for expenses that could have been covered by insurance. 

In our subsequent posts we’d be taking you on a step by step guide on how to avoid these mistakes so, you might want to stick around.