COVID-19 AND MY MONEY

Hello everyone, I hope we are all doing great and keeping safe?

I need not be a Soothsayer to tell of the scourge of COVID-19 on the world economy and coming home to the Nigerian economy, we are not just facing the Virus we are also facing low oil prices which is as a result of the faceoff between Russia and Saudi Arabia (Talks on going to resolve)

As at 20th April 2020.  the price of Crude Oil was $13.5 the lowest since 1999. So, the implications of all this is that we have in our hands an impending Recession, if not already in Recession.

The truth is these affects the world all over, most countries are heading towards Recession, if not already in one.

Let me quickly explain how they intertwine.

The faceoff between Russia and Saudi Arabia started before Corona Virus became a Pandemic, so in other words the USD crisis we are having now is not just as a result of the Pandemic.

That is, In layman terms and in summary we have more supply of Crude in the Oil market and simple economics law of demand and supply kicks in thereby crashing the price worldwide and you and I know that Nigeria is largely a mono economy depending on Oil revenues with our National Budget set at $57/Barrel. But this was reduced to $30/ Barrel.  But even at that we can still meet up as it was sold at $13.50, 20th April 2020. Not only that we have less demand as most factories are shutdown worldwide due to COVID-19, meaning a further reduction in price.

In March 2020 the CBN devalued the Naira to N380.5/$1 and as at today the black market is selling at N416/$1. What is the meaning of this, someone who had 360m before the devaluation you had $1m but now that as reduced significantly. And experts are still looking at a further devaluation soon. What this in turn mean for you and I is that we have our income reduced and our disposable income with it, so we will be experiencing inflation

Because of the high risk of person to person transmission of the COVID-19, the Federal Government lockdown Lagos (Financial Capital) Ogun (Industrial Capital) and Abuja (Federal Capital). And thereby causing Businesses to either a full or partial shutdown, I spoke with some of my Entrepreneur friends and the said they are doing half salaries this month for their staffs and if the lockdown persists they will do no salaries and the sad truth is some businesses may not recover from it.

So, what would I have done before the devaluation (This is for next time):

·       Take a more stable currency position (USD/GBP etc)

·       If you had a foreign currency loan (Business Owners) you should hedge (NDF, SWAP is not visible here in Nigeria).

What should be done now:

·       Review your expenses and reduces frivolities’ as much as you can.

·       Verify investments well and be smart as fraudsters will increase, the last time we had rescission was 2016 and that was when MMM grew more even though it started late 2015.

·       Be financially disciplined.

·       Make and work with a Personal Finance Budget.

Lesson from the whole episodes:

·       Increase your savings culture, so many people are ‘broke’ because of the lockdown.

·       Review your business model/ life model to include contingency plans for situations like this.

·       Always buy things in bulk (Majorly food stuffs etc)

In all this the most affected industries are Tourism, Aviation, Sports, Cinemas, Entertainment, Fashion Hotels etc are all counting losses in revenue.

While some industries are hit hard some are having surge in revenue, Telecommunications, Video Streaming websites (Netflix, YouTube, etc) ,Social Media (Twitter, Tiktok, Instagram etc), Pharmaceutical, Food, Supermarkets etc.

Above all, I am an optimist and I believe we are more than able to come out of this strong and better as a person, as ‘Though Time Never Last but Tough People Do- Robert Schuller’

Let us remember to Keep Safe, Stay Home, Wash your Hands, Maintain Social Distance and remember it is only the living that spends money.

I remain your friend and Personal Finance Coach Babatunde Ayorinde, follow me on twitter @pistis03, on Instagram @personalfinancebabat

And if you like to engage us to speak in your program or for adverts send us a mail at babat09@gmail.com.

Thanks for reading, invite you Family, Friends, and Foes to read the blog, as we move ahead to our financial freedom.

THE SUPER WOMAN

 Years ago, the face of family finance was majorly the man’s business even though some women took the responsibilities of solely providing for the family like paying for the accommodation, feeding and footing all bills.  This was the case of women married to lazy men, widows and those whose husbands could not work due to sicknesses and sort.

The prevailing trend now is more men leave the responsibilities of family finance solely to the woman, I have seen able bodied men who are laid backs, lazy and are comfortable in such situation since they have a woman to provide the basics for them. The fact is situation could make the man earn less, I am not talking about men who are giving it a shot and earning something.  The fact that you are putting in efforts is good enough and I encourage you that if you keep at it, you will break through, for this type of men, it’s good to have a supportive woman who will step in and cover the few lapses. Family finances should be the responsibility of both the man and the woman in my opinion but it is best that it’s well defined in the family.

Handling Financially Induced Depression

                       

 Depression is a part of human baggage which is becoming endemic and we need to take conscious effort not to be caught in its web. Anybody can be depressed, a more crucial reason to be watchful and take personal responsibility for our health and life.

What is Depression? This is the feelings of severe despondency and dejection caused by several situations which includes money problems or financial stress. Many people are having a tough time paying bills and meeting their financial obligations which has led to a feeling of despondency, dejection and ultimately Depression.

I am not a health expert but a Personal Finance Coach, so I can only proffer solution on only financially induced depression from finance perspectives.

You need to do more!!

The New Year has begun in earnest and just like preceding years its fast running, this necessitates the need for us to gear up to do more and begin early.

Most people begin the year with expectations of getting the best financially, but as the common quote goes ‘Talk is cheap’ anybody can say anything. The determinants of a better 2018 is the result you can show at the end of the year, and the truth is: the year had begun already, opportunities are already slipping away and some hopes are been dashed.

I am not a prophet of doom I just want to encourage you to do more as time waits for no man. One proverb I love so much is ‘if wishes were horses, beggars will ride’ you cannot live your entire year on wishful thinking but on practicable actions that can deliver your dreams and aspirations to you. Once again time waits for no man.

Evaluation and Appraisal of your Personal Financial Year

 

  The year will soon be out and done with, A time of the year when establishments and Organizations do an appraisal of how they have performed against their outlook at the beginning of the year. This is necessary to put into perspective what needs to be improved upon and what needs to be jettisoned.

In the same vein, we need to carry out personal evaluation and appraisals of how we have managed our finances during the period under review in this case a Year. I know you are thinking it will be an Apulian task given that the needed comprehensive information are not available for adequate evaluation and appraisal. If this is the case, then some adjustments have to be made in the coming year.

All your income and expenditure needs to be recorded, by having a complete and right transaction narration as much as possible. For you to achieve much with the income you earn, you need to block leakages and this leakages can only be identified by doing a thorough and sincere evaluation and appraisals.

Your Family and Your Money (Focus on the Nuclear Family)

Being married brings you to a place of responsibilities, it doesn’t matter if you are the man or the woman, it is, however, more important for the man to quickly understand that his income has become ‘our income’ based on our culture and the female gender belief. I also understand that we have a class of ‘Super Women’ who are the ones footing the family bills (We will discuss more on this soon)

Free Personal Finance Seminar!!!!!!

Do you wish to take charge of your finances? If your answer is yes, then you need to plan and prepare to attend this free Personal Finance seminar on the 2nd October 2017. Pre-register here: https://goo.gl/forms/d4DrcISf04wb92Bj1. Share with friends. Limited space available.

"Land Speculating- An Investment with huge returns but require a lot of care!"

I first read about Land speculators while in the University some years back, and it was eye opening, I cannot remember which book it was, but it was a book on history in my University Library. Let us look at this investment strategy a bit closer.

A land speculator is someone that buys a large amount of land for little money and also with no intention of using it, then sells it for a larger amount of money to many people to make money when the land appreciates.

Personal Finance

Money and Family Members- The Extended Family

This is a sequel to the first post on money and friendship (Get it here), in this post we are considering your personal financial relationship with your family members, with an eye on the extended, say your Brothers, Sisters, Cousins and the like.

Just as Money and Friendship do not mix well, same can be said of Money and this family members, a lot of people have got their hands burnt for lending money to family members who will not return and will still be arrogant about it. 

Money and Friendship

 Money often does not mix well with friendship, as so many promising friendships are lost based on money issues. In most cases, this happens when friends borrow money and refuses to pay back or when there is a business deal between friends and one party decides to play the smart one and cheats the other. And because of this personal experience, most of us have put our friends in different buckets, hear say, and characters exhibited by the friends in question.

The truth is you are also being placed in buckets too based on the same measurement by some friends. Let us do a quick evaluation of your friendships, quickly list five friends you can do business with without fear of losing your funds, and now list the friends you can never trust with your money (You need not write them out). You see how easy it was to put your friends in one of these two buckets? You reached this decision based on a few parameters best known to you, which might not be correct in its entirety. It is not strange that many people have a lot to say on money and friendship and the need to exercise caution but, the beautiful thing is that we can have a sustainable balance wherein our friendship is secured and our ‘business friendship ‘ is also very secured

Mortgages 101

 Been a house owner via  Mortgage is very prevalent in developed countries, however not in Nigeria due to the high interest rate which is applicable to any other loan that can be accessed here. So what then is Mortgage?

 A mortgage is a debt instrument, secured by the collateral of a specified real estate property, that the borrower is obliged to pay back with a predetermined set of payments, usually monthly. It is a secured form of loan and usually secured with the property being purchased. In Nigeria most commercial banks offer mortgage loans we also specialized banks called mortgage banks whose primary focus is mortgages.

In accessing a mortgage loan, there are few criteria that you must fulfil and there is a limit to the loan you can get for your home, irrespective of your income. These factors may include but not limited to the following:

Key things to know before getting a loan

Feedback from our last  post shows that so many people feel cheated by financial institutions as well as loan providers, this is why I feel we need to look at critical things to look into before getting a loan.

 Note when securing a loan, all charges be it internal or external charges incurred while processing the loan will be borne by you, so let’s take a look at common terminologies as well as costs associated with loan collection

INTEREST RATE: A rate which is charged or paid for the use of money or money borrowed (Loan). Interest rate is often expressed as an annual percentage of the principal. It is calculated by dividing the amount of interest by the amount of principal. Interest rates often changes as a result of inflation or as agreed by the Lender and the Borrower. This is normally expressed in percentages (%).

This is a key factor in loans and it’s one of the elements with which the profitability of the financial institution is built. And it is not a fixed rate because it is a percentage and most interest rates are flexible, it could either increases or decreases, and the financial institution would have made you sign a document saying they reserve the right to change the rate, so it is key for the Borrower to read the loan contract (Terms and condition) well before appending signature, most times we are so excited about getting the loan that we forget the years or months paying it back, this post is not to scare you away from taking loans but to get you educated about the nitty-gritty associated with it. I take loans myself, funding any mega project requires a loan for success, the pillar that sustains any conglomerate is a loan and so on.

Concepts on personal loans.

Personal loan has been used by many to achieve great feats and it as also choked up many. Most people take personal loans to handle financial obligations that savings alone cannot handle in the short run.

How do I mean? let’s look at this example: if one of my personal finance target for the year is to get a landed property, that will cost me a million if I pay now, but the might increase at the end of the year and also I may not get a good location if I am to wait till the end of the year and I have just two hundred thousand in savings, which means I have a shortfall of eight hundred thousand and if I am to save on a monthly basis, I will need a minimum of Sixty Seven thousand monthly for the next twelve month and by that time the value of the land might have moved higher, so to hedge this I get a personal loan to secure the land and I will then pay back, over the period, this example simplifies the advantage of time value of money with loans. As beautiful as the example looks so many times when you do not calculate well it might end up choking you. As a personal finance coach I advise that before you take a personal loan, try to factor the repayment such that it does not choke other essential financial obligations.

Even though I am no averse to loans, I will like to say that the following points are worth pondering upon before you take that personal loan.

Basic Concepts of Credit Cards.

Credit Cards are becoming more accepted in our society as it avail you of the opportunity to access soft loan on the go. It’s important to note that Credit Cards are a recent phenomenon and their ubiquity is owing to the ease with which Banks give these Cards. The reason is that Banks make tons of money through the issue and usage of these credit cards at the expense of the consumers. The hidden costs of credit cards are not known to the recipients of this cards. This money is taken from the vendors of the goods and services who in turn charge you for this extra money that they pay. However, Credit Cards also have substantial advantages if they are used wisely. Just as known in case of credit and debit, the human mind is not prone to prudence and care. Many in western world are in serious debt as a result of having access to credit card funds. The ‘short term pleasure’ of buying stuff from your credit cards is too much to resist for most people. If the credit was unavailable, then people would not have fallen into the problem of debt in the first place.

Bank Statement Review

 

Let me start by wishing everyone a happy new year, 2016 was a great year for some for the larger population it was challenging and that is why I feel we should talk about little things that cost of money.

And that is our banking relationship, yes Banks make money from us one way or the other, the truth is we cannot totally eradicate hidden charges from dealing with banks, some are not even hidden.

Personal Finance and Risk Part 2

From our last post (Get it Here), we were able to pin point that everybody is a Risk taker, and I believe that most of us would have by now know the category we belong too, but by and large, research as shown that most people belong to the Neutral Risk takers. But can I ask this sincere question, most people say they do not like to take risk at all, but yet their vehicle insurance is third party, meaning you will have to pay for your own vehicle repairs in case you are involved in an accident. And yet you claim you are risk neutral or risk averse.

Let us look at Risk management:

Risk Part 1

Risk is a part of our everyday life and as such we cannot talk about Personal finance and not discuss our risk appetite because so many financial decisions are hinged on our risk level.

 Virtually all areas of Personal Finance have risk elements in it, from Investment decisions to Savings decisions to Spending decisions to borrowing decisions, to changing your job, etc. and therefore we must consider it.

My Personal Finance Story

Hey, my name is Felix (Not real name), I am in my mid-thirties and this is my personal finance story:

I was born into a humble family, where both parents were Civil servants, our family finances were up and down, but we never lacked food and shelter at any point, and all the six children went to good school and at no time were we sent out of school for school fee, it was paid as at when due, how my parents pulled that off I do not know considering their salaries as at then.

One major key for a good life I learned from my parent is the dignity of labor, my dad was an electrical engineer and as such he did contracts, and this was my first shot at making money. I worked and I was paid to the level of my knowledge at par with the others at my level. I had my first proper job as a primary school teacher when I finished secondary school, that was 1996, salaries were paid in cash those days, well packed in envelopes with your name well written at the back, I remember my very first salary, I took it home very proud and I was encouraged by my folks, I can remember I bought a bible with part of the money, yea I love God.

Can we Face the Reality?

I have been a bit disturbed by the timing of recent policies of the Nigerian government, there are three in particular that I feel is bound to make a standard of living that is already low, lower:

   1)       The total deregulation of PMS (Premium motor spirit) which increased the price of the product by about 67%. I am not against deregulation, in fact, it is the way to go, but I thought necessary infrastructure/policies and structures would have been put in place before such statements are made public. The bottom line here is that cost of goods and services will increase, and as a matter of fact, it has increased already.

2)      The intended increase of VAT from 5% to 10%. This will increase the cost of goods and services because the increase in Tax will be passed to the buyers.