Archive for August, 2007

When kids become parents?

August 30, 2007 at 7:09 am · Filed under Marriage, Women and Money

A few years back, I remember watching an ad by a non-governmental organization in the United Kingdom campaigning against child abuse. The ad was a role reversal depicting kids shouting and screaming at their parents to buckle up, be more intelligent, acquire social skills and all kinds of other things adults harass their children about. It was an eye opener for me. So why did I suddenly remember this campaign five years down the line?

If you haven’t noticed or been properly observant, our kids have become brats overnight. The transformation has been so rapid with the whole world becoming a global village that when I tell my nephews to be quiet, they actually tell their aunt to go into her room if she desires a bit of quietness. Whatever happened to respecting old age?

In my part of the world, old age is respected – you dare not meet an elderly person in the morning without your two knees touching the bare floor in greeting. Today’s kids will either say hi, hello or offer to shake your hands instead of kneeling down. To what do we attribute this? Gone are the days when the Nigerian man’s monthly income was enough for the entire family and the wife had to be a stay at home domestic engineer. Now more women are entering the workforce and earning as much as their men, while some women have become the breadwinners in their respective homes. To compensate from being absent at home and to ensure good behaviour, a lot of parents are spoiling their children by buying them the latest ipods, playstation III, latest shoes, clothes, expensive perfumes, mobile phones and stuffing them with too much fast food. Take a look at the newly wedded couple on your street and observe the kind of unending shopping sprees couples throw themselves into once the wife is pregnant. Too often they end up buying items that the unborn child may never use or wear. Have you considered what happens to a kid from a low or middle-income family who comes home from school demanding that the parents buy him or her the latest school bag or shoes due to what his peers are wearing?

So I ask myself do we still care about good manners or have we simply lost it? We’re gradually raising kids, who always get what they never asked for and kids, who spend too much time in front of the television and who’re socially backward. Like an article puts it “the primitive instinct to protect kids from anything negative has turned to something more sinister, a cocooning which results in them being completely ill-equipped to cope with the world outside their own home”. However, can you blame them if no one has ever said “no” to them?  

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Obesity is “Socially Contagious”

August 29, 2007 at 7:09 am · Filed under Frugality, Getting Started, Women and Money

I was reading a recent article when I came across a recent study, which suggested that obesity could be passed from one person to another. This means that if your friends or family get fat, chances are you will too. This astounding result is based on the fact that social ties influence our eating choices rather than individual food choices. Having friends and families who are obese often changes our perception towards body changes even when friends and families live a long distance away from us.

After reading this article, I really thought about it and tried to see if these social ties also affect our attitude towards money. I spoke with some of my friends during the week and we came to the conclusion that our social tie is directly linked with our attitude to money. For instance, if your friends and family are constantly in the habit of living above their means, chances are you will too. Eating and munching without consideration increases your waistline and also depletes your wallet gradually.

My current circles of friends range from the “Joneses” wanna be, frugal or the one I call “the wreck spender”. From this circle of friends, I have learnt how to save for the future and how to avoid stupid money mistakes. Do you constantly surround yourself with friends who are always eating out at fast food joints or indulge in excessive smoking and drinking habits? You can suggest a cheaper alternative by inviting them over to your apartment or ask people to bring a piece of the meal you intend to prepare. You can also suggest the idea of quitting these bad habits using a gradualist approach.

Do you have friends who are constantly shopping incessantly, you can either decide to carry smaller bills like N1,000 and also suggest window shopping as a cheaper alternative.

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Planning For Christmas

August 28, 2007 at 7:54 am · Filed under Getting Started, Women and Money

“And I saw mummy kissing Santa Claus, underneath the mistletoe snowy white

  She did not see me creep down the stairs to have a peep,

  She thought that I was tucked up in my bedroom fast asleep…

 

 “Rudolph the red nosed reindeer, had a bright and shiny nose

 And if you ever saw it, you would see it as it glows…”

 Welcome to the season of good tidings and general feeling of expectancy. You may be wondering ‘Hey! Hold it! Christmas is about four months away, but you know what, you need to start planning before the big event comes and knocks you round the corner. I don’t know about you but Christmas is a time for me to let loose and become a child again because I always walk around feeling blessed and generally having a feeling of positive expectations about future events yet to happen. Starting from next week, we’ll be waking up with Christmas jingles; carols and social events all planned around this special festive season.

Pick up your books and dust it for its time for another round of shopping galore for food items, Christmas trees and accessories, presents for our loved ones, vacations and weddings e.t.c.  One of the savings goals I planned for this year was to set up a separate savings account through which I’ll be depositing a monthly savings of N2,000 to take care of xmas expenses. Eight months down the year and I am yet to get started. If you’re in my position and you’re dreading the extravagant expenses that comes with the season, there’s no better time to start saving than today.

 I’ve decided to shelve the idea of opening an account till next year. Starting from this month, I’ll be leaving 5% of my income in my current account to take care of sudden expenses that may come up during the season. I’m leaving this stated sum cos it’ll deter me from writing out a check until I’ve reached my target sum for Christmas. I usually advise women, that we start buying most of the non-perishable items we’ll need during the season right now.

If you’ll be inviting extended family, this is the time to stock up on groceries, household cleaning supplies, toiletries, food items, presents, sweets and chocolates for the kids. Local markets such as Oke –Arin, Balogun, Mushin, Akilapa markets offer great shopping bargains if you’re buying in bulk. You may also decide to buy your beef or poultry in advance via storage in your deep freezer till when you need it. For your poultry and beef purchases, I usually advise that you marinate as soon as you buy by using the following items;

  • Ginger (fresh)
  • Garlic
  • Thyme
  • Salt and Seasoning

Grate or blend these items and marinate your poultry. Leave for an hour or more depending on your preferences.

 Family outings – there are innumerable offers and discounts offered by various entertainment outfits trying to outdo one another. So look at all your available options and choose an outing that will enhance family bonding. I intend to see a lot of movies this Christmas, so I’ll certainly be looking out for cool deals from Silverbird Galleria and Nu Metro Media at The Palms. If you’re a bookworm like me, this is the season to get the best sellers at an affordable rate as a result of discount sales that’ll be ongoing.

Traveling to the village – bear in mind that you’ll be incurring greater expenses due to fuelling, cash gifts to relatives and other food items you’ll be taking to the village. It’s also advisable to travel with a first aid box to take care of the occasional headaches, slight fever, cold and catarrhs due to the harmattan period. So, 5% of your monthly income may not be adequate unless you stretch it to 10%.

 Entrepreneur – your business has clocked a year or more, six months and you’ve received an encouraging patronage; this is the best time to reward your loyal customers or clients for pitching their tents with you. However, there is no need to rob the bank to do this; I know it’s customary to give out hampers but why not beat the market by packaging the hampers yourself thereby reducing overhead cost. You may also deviate from the norm by giving out indigenous packaged food items and if your valued customers have kids, you may throw in a book or two. Your customers will stay glued to you cos it shows that you’re thinking about their entire well-being. 

 Vacations – if you’ll be traveling outside the country, this is the best time to don on your goggle cap by searching for incredible airline offers, best bargain for hotel or apartment deals and sightseeing offers that will not deplete your wallets. Did I leave anything out? Yeah, possibly but before you start dreaming about the Christmas cakes, chicken wings and laps you’ll be feasting on, remember to leave at least a month’s salary in your account if you’re single and two months salary if you’re married to take care of the “January blues”. Don’t say I didn’t warn you.

Merry Xmas in Advance dear readers!

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Reasons why you should start investing

August 27, 2007 at 7:28 am · Filed under Getting Started, Investing, Nigeria

When I discuss the future with some of my friends, I receive the response “the future will take care of itself”. To this statement I always say, “The future will take care of those who have taken care of the future”. Every human being who receives a reasonable sum of money as a monthly income should start investing for the rainy days. If you’re still procrastinating on saving for the future, these are some of the reasons you should consider.

Inflation – we’re all aware that inflation erodes the real value of money. What N100.00 could buy a year ago, the same amount cannot buy the same item currently. If you’re committed to saving N100 daily by trimming on items that you really do not need, you would be saving a total amount of N3,100 weekly and N37,200 on an annual basis. If you invest this amount in an investment or mutual fund such as “the ARM Discovery Fund” with an annual return rate of 8% per annum. In five years, this principal capital would have returned a total sum of N52, 080.

Future value of the Naira – a lot of individuals I know are quite pessimistic at the slow economic growth rate being experienced within Nigeria. I always point out that if our economic growth rate is slow and not rapid, why do we have a lot of foreign investments within the economy. (Think about the recent re denomination policy by the CBN) 

Let’s be honest with ourselves, we may not be satisfied with where we are economically and socially as a nation and as a people; but the government of the day is gradually putting in place policies that will transform the economy of this nation. When I was growing up, I was taught by Ghanaian teachers but nowadays, where are they? They’ve gone back home to a country that has become one of the fastest growing economies within Africa.

Financial Freedom – while watching the “Oprah Show” today, I was struck by the saying of the doctor who was invited on the show to talk about cultivating healthy eating habits. He said, “You don’t have to be motivated before cultivating an healthy lifestyle, doing it is enough motivation”. When I began my journey towards financial freedom, early retirement was the main motivation and I had a fixed figure in mind that I needed before I could retire. I never assumed that what I earned was insignificant. I made up my mind to save as much as I could with my mind fixed on the pictures of what I intended to do after retiring.

Capital gains – our parents grew up with the mindset of working and eventually retiring to paid pensions by the federal government. Many of them did not take advantage of the gains to be made on the capital market due to limited awareness and knowledge about investing in stocks. Imagine what the net worth of an individual who purchased stocks when they were being sold for less than a kobo would be by now. Such an individual would be worth several millions or billions of naira. Friends tell me that investing in the capital market requires huge funds to which I disagree. If you fail to take advantage of the knowledge that’s prevalent nowadays and kick start your investment goals, some few years down the line, the same stocks that are being sold for N30 max will be sold for N100. So, what are you waiting for?

Just how rich is rich? – When I graduated, earning a monthly income of N50,000 seemed like a huge sum of money and I thought of what I could do with such an amount. Two years later, the same sum does not seem so huge anymore. Now I think of how much I would be able to invest if I was earning half a million naira monthly. Some few years down the line, half a million might not seem a big deal anymore depending on where I am on my career path. You’re the only one who can determine how much you’ll need to be wealthy or rich. The earlier you start, the better off you’ll be.

Your Retirement fund is not enough to live the kind of life you desire. While saving for retirement is important, if you don’t have enough funds set aside for emergencies and life’s little luxuries, you may have to dig yourself out of debt.

One thing you can be certain of is that nobody will pay for your financial indiscipline if you don’t kick the habit in the bucket. I know of individuals who are waiting for their spouses to bring in the dough, waiting for an inheritance that may never come or hoping to win the American lottery or Who Wants To be a Millionaire cash prize of N10 million naira which may never materialize.

Luxury – if you’re having problems denying yourself a little bit of luxury, think of saving for investment as a means of buying financial freedom for yourself. Otherwise, open a separate account that will take care of occasional splurges on luxury items.

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How The CBN Announcement Will Affect You

August 17, 2007 at 7:14 am · Filed under Banking, Investing, Nigeria

I stumbled upon this article written by the Proshare team and it answers some of the questions I had earlier written about the new naira structure.

 

How will the new monetary regime rolled out by the CBN affect Nigerians is the million Naira question resonating in the minds of its citizens and foreigners alike. Although the new monetary regime will be effective August 1, 2008, the days and months ahead will be crucial. A picture of how this new regime will impact on the lives of Nigerians, and how individuals, organizations and the system will respond to the challenges of this revolutionary policy will soon begin to crystallize.

However, one thing is certain: the Naira will shrink, but the value will go up one thousand per cent. On August 1, 2008 all currencies and coins will change with the highest denomination of currency being N20. All prices for goods and services including those for labour and food will move two decimal points to the left. What this means is that on that date, if you go to the bank to change N50,000, you will get N500. If you earn N200,000, your salary will translate to N2,000 while your house rent of N419,000 will now be N4,190. Your plate of meal at a restaurant, which used to be N2,000 will now be priced at N20 while the N130 price tag for your favourite loaf of bread will now sell at N1.30k.

A consequence of this is that the nation’s billionaires may be downgraded to millionaires, its millionaires will now occupy the ‘thounsandnaire’ spot, while the latter will now become ‘hundrednaires.’ Effectively, Nigerians will be spared the ordeal of bulky sums, which before the advent of bigger denominations have been transported via all manner of means including cartons.

The new CBN policy will usher in a new regime of pricing of goods and services. By ensuring that the Naira becomes a currency of value and a currency to hold, the likely scenario is that people will stop pricing goods and services in US Dollars. Those goods and services that will be affected may include hotel room rates, house rents, airline tickets and a number of others things.

An immediate impact on the forex market is a run on US Dollars, as most people in the hope of getting more value for their money will begin to trade in their US Dollars. So, in the days ahead, the Naira may begin to firm up against the US Dollars. In the new order, if you store value in US Dollars, you will certainly lose value. In the same vein people who price goods and services in US Dollars will continue to get lower quantities of Naira.

But may be we should have read CBN Governor, Prof. Chukwuma Soludo’s lips last year when he said that Naira is the currency to hold. He had made the prophetic(?) saying against the backdrop of the convergence of the parallel and the official markets.

This will no doubt spell the final death knell to parallel market operators otherwise known as black market. It will no longer be profitable for them to trade in forex as the margin will not guarantee any meaningful gains. With time, CBN will gradually withdraw from its interventions in inter-bank market and proper trading in forex will evolve between banks and dealers.

Because the new currency regime will be simple to exchange, simple to denominate, simple to store and above all have value, it will become a reference currency to which other currencies can be benchmarked in the African region. To this end, the dream of making the Naira the currency of the West African sub-region may yet be realised.

There is no doubt that the Naira has for several years been insulated and shielded from all of these things that would have ushered a new dawn. But the realignment of the value of the Naira, the deliberate attempt to ensure its stability and convertibility would in great measure facilitate global integration.

On the take off date of the new policy, the Naira will nearly be at par with the US Dollars. N1.25k will exchange for US$1. This was what the exchange rate was before the advent of the Structural Adjustment Programme. It means that in nominal terms, nothing will change, but with inflationary targeting, the Naira will gain value.

But there may yet be a downside to this new monetary regime, as it concerns budgets for all tiers of government. Assuming the Naira appreciates so much against the US Dollars. The price of the nation’s crude oil, which is still a major component of its earnings, will become expensive. If the product is too expensive, buyers may be forced to source for it elsewhere. Consequently, there will be less income and less money for the Federal Government, the states and local governments to share.

This situation will certainly make nonsense of their budgets. So what is the way out of this scenario: recourse to internally generated revenue (IGR) and taxation. These two elements will not be subject to the volatility of the forex market and the demand and supply of crude oil. Experience has shown that in the new world order, taxation and improved fiscal regime and not recourse to export proceeds is the way forward.

The consequence of this new monetary regime on investments is that it will further attract foreign direct investments (FDI), as Nigeria will become a preferred investment destination following improved value on the Naira. - Thisday

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$1.00 to N1.25 – How? What? When?

August 16, 2007 at 9:39 am · Filed under Banking, Nigeria, Stock Portfolio

When I read the headline tagged “CBN restructures Naira”, I thought it was another impending macroeconomic policy aimed at reducing cash liquidity within the economy. It was when I read the story that the import of what the CBN is planning to do struck me. Since the news broke out, I’ve been receiving calls from my friends overseas who are wondering how this will happen and what impact it will have on our economy.

According to the governor of the Central Bank of Nigeria, this policy is aimed at reducing inflationary rates to single digit, reduce cash liquidity within the economy and restore the value of the naira to what it was in 1985 before the Structural Adjustment programme was initiated under the Babangida regime. What it means is that the CBN will be knocking off two zeroes from our current currency, higher denominated currency will be phased out while the highest currency note by next year will be N20.

So it got me thinking on how this will affect our lives as Nigerians. Does it mean that a loaf of bread currently selling for N25 will now be sold for 25kobo; pure water will be sold for 5k; will salaries be reviewed upward or downward to reflect the proposed new value; does this mean that a new car (Toyota) will only cost N20,000; the cost of buying a cow for social events will now be N500 against the old price of N50,000, what happens to housing rates? Will Landlords be willing to receive N5,000 for two years instead of N500,000? Does it mean if I have a bank balance of N1mn, I now have N10,000, what happens to the value of the stocks quoted on the Nigerian Stock Exchange?

Does it mean that it’ll now be cheaper to study abroad without necessarily cleaning out your account? Will a complete set of gold accessories be sold for N1,000 or less? Will it be cheaper to travel for vacations and summer trips? Does it mean for my current job role, I will be paid an amount that is at par with what my counterpart within the same job role in America is currently earning? Will it put a stop to incessant money spraying at social events? Will a basket of tomatoes be sold for N3.50k? Will it put an end to the long queues at the various foreign embassies where Nigerians are seeking greener pastures? Will it lead to increased foreign investments within the country? Will the cost of production be cheaper? Will fuel be sold for 7kobo? Will Nigerians abroad come back home or what? Will it reduce the moneybag syndrome? Will it increase the value of the naira within the African region? Will it?… Will it?… Will it?… endless questions you say…

These are some of the questions running through my mind right now. The Central Bank of Nigeria needs to embark on an awareness campaign to drive the import of this ongoing policy in the minds of the people. We must be carried along to ensure a successful implementation. 

 

 

 

 

 

 

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How to set up a Cooperative Society within the workplace

August 16, 2007 at 7:27 am · Filed under Financial Independence, Getting Started, Investing

While discussing the benefits of a cooperative society within the workplace, a friend of mine indicated interest and enquired on the possibility of setting up a cooperative society at her workplace. I usually advise employees interested in setting up a non-registered society to have a set of goals they intend to achieve.

It is also important that each member should be aligned to the mission and objectives with which the society was set up in the first place. If you’re thinking of setting up a cooperative society within your workplace, these are some of the issues to consider.

Goals – members need to clearly state what they intend to use the pooled funds for. Sometimes, it could be for savings, investment, electronics, vacation, emergency funds or paying for the house rent. Try to be honest with your desired goals so that your peers or colleagues can assist you to achieve this goal.

Credibility and Integrity – there’s nothing as bad as prospective and existing members defaulting on monthly contributions. It debars the objective of setting up the union in the first place. Make sure you only invite members who are committed to pooling funds.

Central Account – you may decide to set up a separate account where members can pool in the needed funds together. However, you will need two signatories to the account to facilitate easy withdrawals. On the other hand, you may issue cheques to each other and when salaries are paid, each beneficiary for the month can go to the bank to withdraw funds.

Number of Members – I usually advise prospective society members to have a small pool of interested participants rather than a large crowd so as to monitor each contributor efficiently. You’ve heard the saying “two’s a company, three’s a crowd”. Stories abound where some contributors default in repayment plans. So make it easier by having a smaller pool.

Set a target amount by having a fixed amount, which each member may pay. You can start with a minimum of N5,000 to any higher value that each member can comfortably afford without having an adverse effect on your monthly living expenses.

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How Much Are You Spending On Bottled Water?

August 14, 2007 at 8:56 am · Filed under Frugality, Nigeria

Since the advent of pure water in Nigeria, we have been inundated with all kinds of water in various shapes and sizes. Various organizations ranging from Nigerian Bottling Company, UAC and a whole list of others have commenced production of water in bottled form.

I don’t know if you agree with me but water is becoming expensive. So, I asked a couple of friends how much they spend during lunch breaks on bottled water and the result was astounding. The minimum amount for a small sized bottle is N50 while the big bottle sells for N150. At social events, it’s a mix of pure and bottled water that is served to guests.

While individuals may have various reasons for buying bottled water, there are cheaper ways of drinking healthy water without depleting your wallet.

Boiling Water – if you have access to water from the Water Corporation within your compound, you can either decide to boil it or drink it straight from the tap. Let’s face it – the bottled waters that are sold out there are obtained from the Water Corporation source. Hey! What’s good for the goose is also good for the gander. Also, bear in mind that there are a lot of recycled bottled waters from unknown sources bearing the names of reputable organizations.

Filter your water before drinking – you can buy the latest range of water filtering machines being sold by various companies if you desire a safer way to drink water.

Recycle your plastic bottles by using the bottles to package drinking water to the office, or store it in the fridge at home so that you do not have to bother about drinking bottles. You may also decide to use it to keep loose change around the house, which can be used as petty cash for small item purchases around the house.

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You can hit the N1mn target by living simply

August 13, 2007 at 7:06 am · Filed under Financial Independence, Frugality, Getting Started, Nigeria

Assume you have a savings goal of N1mn this year; you can achieve this by changing your lifestyle, attitude and mindset. I read the book “The Millionaire next door” and it made me ponder to take a cursory look at my neighbors by observing their lifestyles and attitudes towards the naira, to see if I was truly living with a millionaire next door. I haven’t found that millionaire yet.

According to the book you may be living to a millionaire next door and may not know. Many people already live simple-living lifestyles and don’t know it and many of them are millionaires. You’d never guess that the subject of millionaires could do with simple living, but it does. Most millionaires who have adopted simple living were not born with silver spoons neither do they have high paying jobs. What they do have are simple lifestyles.

So why aren’t we all millionaires if it’s that easy? Simple – we regularly and continually give our money away to other people so they can become wealthy, while we live from paycheck to paycheck. We buy the latest cars, phones, electronic gadgets, biggest houses, take a loan to buy more liabilities than we can afford and end up with more debts than we’re comfortable with.

The millionaires described in this book are compulsive savers and investors. If you’re trying to determine if you’re a millionaire in the making, check out the characteristics of the simple millionaire;

  • They live well below their means.
  • They allocate their time, energy and money efficiently, in ways conducive to building wealth.
  • They believe that financial independence is more important than displaying social status.
  • Their parents did not provide economic outpatient care.
  • Their adult children are economically self-sufficient.
  • They are proficient in targeting market opportunities.
  • They chose the right occupations.

For me, this list represents simple living at its best because it’s about living consciously and with a purpose. This means being in control of your money and life. When you save your money rather than spending, you buy yourself control. With money saved and invested, you can live for years without earning money, or you can afford the luxury of working part time. This is vastly different than living from paycheck to paycheck.


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Protecting the Corporate Image

August 10, 2007 at 7:10 am · Filed under Career, Nigeria

The headline was shocking. It read “NDLEA arrests flight crew member over cocaine”. The first thought that came into my mind was whoa! Hold it! How did this happen? Which airline employed this crewmember? I discovered that the culprit is an employee of Virgin Atlantic. After reading the story, I came to the conclusion that “We all have a corporate image, but few work to protect and project it”. According to nutritionists, it is said, “you are what you eat”.
As a corporate entity, you are what people think you are.

According to the Opinion Research Corporation, corporate image is what sells a company and its’prodcuts or services. Corporate image is defined as the perceived sum of the entire organization, its objectives and plans. Many firms focus little attention on their corporate image until it has been severely damaged (as in the case of Virgin Atlantic).

According to A.C. Nielson, thirty brands that are currently leaders in their respective categories will lose their positions in less than two years. This is attributable to the following factors that determine a firm’s image;

· Influences on image.

· Launching an Image.

· Image Audiences.

· Reaching Audiences

· Plan of Action.

It is important that firms apart from projecting an image to their stakeholders such as shareholders, corporate society, social communities and political circles, also have a responsibility to inculcate this project into the hearts and minds of its’ employees. It is important that employees understand that their skills, attitudes and dedication are a large part of what makes up the company’s image and helps ensure the firm’s success. An undesirable corporate identity is a lot like obesity. It takes a long time to develop the symptoms, and it will probably take just as long, if not longer to achieve significant improvement. It is a multifaceted activity that includes everyone in the organization.

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