Reading time:5 min read

Financial Literacy: Cracking the bone of Mayhem among Nigerian youths

A predominant lesson Nigerian parents always sing to their children's ears is tha 'Cut your clothes according to your size' But then, the Tinubu’s administration has made this difficult to adhere to as the economy gets more stringent and Nigerians keep swimming in the ocean of poverty. In 2024, the World Poverty Clock reported that about 70,834,207 out of a population of 225,731, 260 Nigerians are battling extreme poverty. This implies that an average Nigerian is barely able to live on a day per day given the country’s economic challenges and exorbitant constant rises in prices. Many households currently face a reduction in their purchasing power and incurring debts. In today’s Nigeria economy, the adage is not only necessary but practically essential if Nigerians want to survive in this failing economy.

One of the weapons Nigerian youths can use to combat the failing economy is financial literacy. Sadly, the structured educational system in Nigeria did not make provisions for that, likewise the government. In this regard, fewer youths seek financial literacy when they do not see the need to. The absence of this tool makes youths make ill-informed financial decisions, spend sporadically, and live in the complexities of financial problems. Only 38% of Nigerian adults are financially literate, reflecting a significant knowledge gap, as reported by the Central Bank of Nigeria. This is a problem that hinder individual’s financial freedom and the country’s economic progress.

The youths and financial literacy

Financial literacy is the ability to understand and effectively use various skills such as budgeting, investing, payment of bills, and tracking expenses, among others. In simpler terms, financial literacy provides the foundation to have a smart relationship with money, which is key to a successful financial future. Being financially literate is crucial in Nigeria’s economy as it allows individuals to be better prepared for financial struggles, decrease financial woes, and ultimately survive in this failing economy. Financial literacy consists of financial tools like budgeting, personal financial management, savings, investing, and borrowing.

In a country where financial literacy is given little or no attention, particularly among the youths, there is a need to address the issue and provide initiative for a better tomorrow. It is a fact that Nigerian youths were not exposed to financial literacy in their educational institutions. Even the little savings and investments they engaged in were learnt through seminar or advice from outsiders. So there is an urgent need to overcome this hurdle. The knowledge gap of Nigerians youths in financial literacy limit their access to financial opportunities and achieve financial security. This act impedes slow financial inclusion in the country’s growth and presents a hurdle to the Nigerian youths.

Financial woes: Nigerian Youths in red

Without adequate knowledge of financial literacy, Nigerian youths have been exposed to fraudulent act, and many of them are trapped in indebtedness struggling to meet the repayment obligation. The Economic and Financial Crimes Commission (EFCC) reported cases of financial fraud targeting Nigerian youths. These scams have increased over time due to the knowledge gap of financial literacy among the youths. Also, the notion of quick money syndrome contributes to financial illiteracy as research reported that Nigerian youths invest money in impulse to attain unmeasurable wealth. The truth is that financial security will only be achieved if the youths inculcate financial literacy.

Empowering Nigerian Youths

There are verifiable means to attain financial literacy. Below are some tips:

Create budget : As a student, it is paramount to track your expenses in relation to the money in hand. Your budget should include fixed expenses (investments, loan payments, utilities) and essential payment. Pair your budget with an expense tracking app and identify where your money is every month.

Pay bills Promptly: Make sure to pay your bills regularly to avoid being trapped in debts. Sign up for payment reminders.

Keep track of your credit and debit record : Always request your financial statement to be aware of every transaction that takes place.

Divide your budget into segments: One of the ways to gain the most from the budget is to divide your budget into segments; needs, wants, and savings. The 70/20/10 formula could work maximally in this regard.

Invest in your future: Consider setting aside money, stocks, and fixed income as you will need it when you get older.