A report by Money Africa has said that Nigerians need to get out of bad debts to survive the financial challenges in 2023.
It noted that the residual effect of the pandemic, Russian Ukraine war and high inflation had affected the finances of Nigerians and led to loaning from every means possible to survive.
In the report titled ‘2023 optimism: Making the best of a potentially challenging year’, sighted by The PUNCH recently, it said that in Nigeria, the elections were going to be pivotal to how the year would turn out.
Regardless, the problem of slow growth, high inflation and high unemployment would persist, it stated.
These problems could be worsened by the phasing out of petrol subsidies and a sustained depreciation of the currency unless oil exports recover strongly.
While advising Nigeria to avoid debts, it stated, “There are two types of debts: Good debt and bad debt. You need to let go of bad debt on consumables (debt that has no future value) and gravitate towards good debt. A good debt bears fruit in the future.
“Be less aggressive with non-conventional and high-risk investments. Less than five of your portfolio should be embedded in high-risk assets. The argument here is that, if the investment goes to zero, your portfolio is still standing firm.”
Advising Nigerians to focus on the things within its control, it stated, “You can not change the inflation rate. You cannot stop the Naira depreciation. They are out of your control, so you will do well to rather focus on what you can impact.”
According to the report, in a bid to fight the low tolerance for inflation, the central banks of countries raised interest rates. This had the greatest impact on personal finances since 2008/2009. Many economies slowed down, prompting fears about a recession which also led to job losses. Higher interest rates also led to a reduction in personal wealth as assets people invested in—bonds, real estate, stocks and cryptocurrencies—lost a lot of value.
The report added that to mitigate emergencies individuals must invest in insurance.
It stated, “We did a quick survey asking people what their emergencies were and we realised they were primarily health emergencies, losing jobs and having an automobile accident.
“You can mitigate health emergencies by getting a health insurance plan, so you do not spend out of pocket. We understand how painful losing jobs can be; so, we recommend skilling up aggressively and being visible on platforms such as LinkedIn and others. For automobile accidents, we recommend getting a comprehensive insurance plan (not a third party plan), so it covers everything.”
The report explained that money and the mind were critical conversations individuals should constantly have.
It stated, “Your mindset about money has been formed since age seven. So, you need to unlearn things that do not serve you and embrace the things that give you joy. Do you have a fund for enjoyment? Are you writing out your big dreams that can give birth to more opportunities? What steps are you taking to bring it to fruition?”
SOURCE: PUNCH
