What I Wish I knew About Money 15 Years Ago

Following the recent economic upheavals in Nigeria, many have desperately searched for ways to “hammer”. Some have become unfortunate victims of get-rich-quick schemes.

I decided to write this article to capture what I wish someone had taught me about money, fifteen years ago.

1. Money is seasonal; it comes and goes. This is not my first recession. I’ve worked for over fifteen years and so, I’ve seen at least two major “recessions” in Nigeria. There were times when my clients tightened their belts, the prices of basic goods & food skyrocketed, and my standard of living plummeted. But the interesting thing is this – before the times of lack came, there were periods of plenty. New jobs and ideas came and with them, a steady stream of income. It is what I did in those times of plenty (whether I invested or not), that determined how much I suffered during the bleak times that followed.

You should pay attention to your seasons of plenty. Don’t waste them. I am ashamed to say that I wasted a few seasons and regret doing so.

1. Adopt the 10% rule, from your first salary or income. Anyone who has read Rich Dad Poor Dad or The Richest Man in Babylon, already knows this rule. Whenever money comes; whether salary, income or gift, pay yourself first. This means you devote at least 10% of your money for investment purposes.

Now the next part is important. Remove the money from your account and transfer it to an investment vehicle, that you cannot easily access or liquidate. Even if it’s N5,000, take it out immediately. Never wait until you build money up to a significant amount, before you invest.

I remember a few years ago, I was looking for an investment vehicle for some money I had made. An investment professional advised that instead of using a savings account with an annual return of 4%, I should try a Money Market Fund. At the time, the return was 18%. As the funds were backed by Federal Government securities, my principal was guaranteed. Now, anytime I make money, I pay in at least 10% into my Money Market Fund account immediately, while I’m considering other things to invest in. I never leave the funds into my current account, where I can easily spend it.

1. Invest in what you know. Don’t invest in something just because everyone else is doing it, or because someone told you about it. If you don’t understand, read about it. Also ask questions and talk to more than one expert to get different perspectives.

I remember when Bitcoin (and other types of cryptocurrency) seemed to be in the news all the time. Some Nigerian websites advertised that you could buy from them. After conducting my due diligence, I discovered that some of them were not connected to the global blockchain and were scams.

When I wanted to invest in land, I discovered that from time to time, State Governments would partner with private companies to develop new estates. I did my due diligence and helped a friend invest. Today, that bet has tripled in value. I did my research again, when I invested in agriculture. You should learn about the investment opportunities around you and if you don’t understand them, don’t invest.

1. When you travel abroad, don’t only go shopping. Take advantage of being in a foreign country to learn about investment opportunities there. Many countries allow you to open a bank account, even if you don’t live in that country. They simply charge a token monthly maintenance fee, if you’re non-resident. Having a foreign bank account allows you to build up foreign exchange for a time when you’ll need it. You’ll also you have a back-up debit card to use when you go shopping, and can tie your account to PayPal. It is important to read the terms & conditions of your foreign bank account and adhere to all the rules. Be responsible.

2. Stop giving away your time for free. Unless you’re sowing a seed (in which case, God will reward you) or making a charitable contribution, you are responsible for maximising the commercial value of your gifts and talents.

I give out a lot of information for free on social media. But, it’s my way of giving back to society. However, I also get paid for public speaking and social media engagements. I have written books I sell commercially. What gift, talent or capability can you exchange for commercial value? If you’re a blogger, have you registered for AdSense or Facebook Audience Network yet, so you can start earning income from your writing?

1. Be careful about investing in people you do not trust. Even if the promoter is your bosom friend or family member, say no. If you do not understand their business model, or are not comfortable with their character, don’t invest.

I usually operate a simple model. After doing my due diligence, I invest a small amount that I can afford to lose. Then, I watch the company for a while. If I’m impressed with their management of resources, I then invest some more. I worked for my money. Therefore, I never part with it irresponsibly.

What other lessons have you learned about money over the years? You should take some time to ruminate on them.

Subomi Plumptre is a leading African strategist focused on brands, business, investment and social media. She currently heads the Corporate Practice of Alder Consulting. She is a Corporate Wealth Representative for a leading Bank in Africa and writes an investment series on her website.