8 Money Mistakes Nigerians Make (And How to Avoid Them)

“Na so I enter am o” is often a common statement on Nigerians’ lips. Not just when they abuse a soldier unknowingly, but even when we make a poor financial decision.

We’ve all been there – that moment when you realize you’ve made a financial decision that will haunt you for months, maybe even years. Whether it’s falling for a “too good to be true” investment scheme or spending your entire salary before the month ends, money mistakes are unfortunately a shared Nigerian experience.

But here’s the thing: these mistakes don’t have to define your financial future. By understanding the most common pitfalls and learning how to avoid them, you can turn your financial wahala into wisdom.

In this article, you will be learning the top 8 money mistakes you are probably making and how you can make better decisions moving forward. You will see the wahala, the real talk, and how to avoid casala. Walk with me!

1. Falling for Get-Rich-Quick Investment Schemes

The Wahala: “Invest ₦50,000 today, get ₦200,000 in 30 days!” These enticing promises flood WhatsApp groups, social media, and office conversations. From cryptocurrency “sure bets” like CBEX to pyramid schemes disguised as multi-level marketing, these schemes prey on our desire for financial breakthrough.

The Reality Check: Legitimate investments don’t guarantee 300% returns in 30 days. If they did, banks would be offering these returns, not random people on social media.

Your Action Plan:

• Research thoroughly: Before investing a kobo, verify the company with the Securities and Exchange Commission (SEC) or any alternative in your country. There, you will see registered investment websites and warnings about fraudulent schemes.
• Apply the “too good to be true” test: Annual returns above 15-20% should raise red flags. You sef reason am, how?
• Start small: Never invest more than 5% of your total savings in any high-risk opportunity.
• Demand documentation: Legitimate investments provide detailed prospectuses, not just flashy brochures. If you can’t ask, ask an expert in the field for their opinion.
• Check testimonials independently: Verify success stories through multiple sources. Although this can be misleading, as there can be several false reviews.

Learn More: Explore safer investment options in this video on investing in Nigeria.

2. Living Without a Budget

The Wahala: “Budget ke? I’m not earning enough to budget.” This mindset keeps millions of Nigerians trapped in a cycle where salary disappears mysteriously before the month-end, leading to constant financial stress and borrowing.

The Reality Check: Budgeting isn’t about restriction; it’s about intentional spending. Even with a modest income, a budget helps you identify money leaks and prioritize what matters most.

Your Action Plan:

• Track everything for 30 days: Use apps like Mint or simply write down every expense
• Implement the 50/30/20 rule: 50% for needs (rent, food, transport), 30% for wants (entertainment, dining out), 20% for savings and debt repayment. You can get a deep dive into our article on the 50/30/20 budgeting rule.
• Start micro-budgeting: Even ₦500 daily savings equals ₦182,500 yearly
• Use technology: Try budgeting tools like our Free small financial calculator.
• Weekly budget reviews: Adjust spending patterns based on what you learn

3. Not Having an Emergency Fund

The Wahala: When your car breaks down, a family member falls ill, or an unexpected job loss occurs, you’re forced into expensive borrowing situations, often at high interest rates that compound your financial stress.

The Reality Check: In Nigeria today, most people cannot cover a ₦100,000 emergency without borrowing. This vulnerability keeps people in a perpetual state of financial instability.

Your Action Plan:

• Start impossibly small: ₦1,000 weekly builds to ₦52,000 annually
• Build systematically: Aim for 3-6 months of essential expenses (not total income)
• Choose the right account: Keep emergency funds in high-yield savings accounts like those offered by Sterling Bank or ALAT by Wema
• Define “emergency”: Medical bills, job loss, major repairs, not sales at the mall
• Automate transfers: Set up automatic transfers to remove temptation. You can use your mobile money apps for this.

4. Borrowing Money for Lifestyle Expenses

The Wahala: Using loans, credit cards, or salary advances to fund weddings, buy the latest iPhone, or maintain a lifestyle that exceeds your actual income. The resulting debt cycle can take years to escape.

The Reality Check: Consumer debt in Nigeria often carries interest rates of 15-30% annually. Borrowing ₦200,000 for a phone at 24% interest means paying ₦248,000 over one year.

Your Action Plan:

• Implement the 24-hour rule: Wait a full day before any non-essential purchase over ₦10,000
• Calculate true cost: Include interest and fees when considering borrowed purchases
• Create sinking funds: Save monthly for predictable expenses like celebrations or gadgets
• Apply the 30% rule: Total monthly debt payments shouldn’t exceed 30% of your income
• Prioritize assets over liabilities: If you must borrow, choose investments that can generate income

5. Putting All Your Money in One Place

The Wahala: Keeping everything in a single low-yield savings account (often earning less than 5% annually) while inflation erodes your purchasing power. In Nigeria’s current economic climate, this approach guarantees your money loses value over time.

The Reality Check: With inflation rates often exceeding savings account interest rates, your money is actually shrinking in value when it sits in traditional savings accounts.

Your Action Plan:

• Diversify across account types: Use different accounts for different goals
• Maximize FDIC protection: Don’t exceed ₦5,000,000 in any single bank (NDIC insurance limit)
• Explore treasury bills: Nigerian treasury bills often offer better returns than savings accounts
• Consider mutual funds: For long-term growth, explore funds offered by companies like Stanbic IBTC Asset Management
• Match timeframes: Short-term goals get safe savings, and long-term goals can handle more growth-oriented investments.

6. Not Planning for Retirement

The Wahala: Relying on children, government, or hoping “something will work out” instead of actively building retirement wealth. Many Nigerians reach their 50s with minimal retirement savings, forcing them to work indefinitely or depend on others.

The Reality Check: With Nigeria’s pension system still developing, personal retirement planning becomes crucial. Starting at 25 versus 35 can mean the difference between a comfortable retirement and financial struggle.

Your Action Plan:

• Maximize employer matching: If your company offers pension contributions, contribute enough to get the full match
• Open an RSA: Retirement Savings Accounts through PenCom-approved providers offer tax advantages
• Use compound interest: ₦10,000 monthly starting at 25 can grow to over ₦50 million by retirement
• Increase contributions annually: Boost retirement savings by 1-2% each year
• Diversify retirement investments: Don’t rely solely on pension schemes

7. Emotional Spending

The Wahala: Using shopping as therapy, celebrating every small win with expensive purchases, or spending to impress others on social media. Emotional spending often leads to buyer’s remorse and budget destruction.

The Reality Check: Studies show that emotional purchases provide temporary satisfaction but often lead to long-term financial stress, creating a cycle where money problems cause emotions that lead to more spending.

Your Action Plan:

• Identify your triggers: Notice when you’re most likely to overspend (stress, celebrations, social pressure), and avoid them.
• Create spending buffers: Build “fun money” into your budget for guilt-free emotional purchases.
• Find cheaper alternatives: Replace expensive emotional outlets with cheaper ones (exercise, cooking, calling friends). This way, you are spending but benefiting as well.
• Use the “cost per use” calculation: Divide purchase price by expected uses to evaluate value
• Implement cooling-off periods: Wait 48-72 hours for purchases over ₦20,000

8. Not Investing in Yourself

The Wahala: Viewing education, skill development, and health as expenses rather than investments. This short-sighted approach limits earning potential and long-term financial growth.

The Reality Check: As a Nigerian, continuous skill development is a must. It often determines earning potential more than initial education or experience.

Your Action Plan:

• Budget for growth: Allocate 5-10% of income to personal development, maybe after a set number of months.
• Leverage free resources: Platforms like Coursera, edX, and YouTube offer world-class education.
• Invest in health: Regular checkups prevent expensive emergency treatments. If you are a remote worker, get your workspace set up.
• Network strategically: Attend industry events and join professional associations
• Track ROI: Measure how new skills translate to income increases

From Wahala to Wisdom: Your Financial Transformation Plan

Recognizing these mistakes is just the beginning. True financial transformation happens when you consistently apply better habits over time. I have compiled a 30-day challenge plan that you can follow. 

Your 30-Day Challenge:

Week 1: Assessment

• Track every expense
• Calculate your net worth
• Identify your biggest money mistake from this list

Week 2: Foundation

• Create a basic budget
• Open a separate savings account
• Set up one automatic transfer

Week 3: Protection

• Research legitimate investment options
• Start building your emergency fund
• Review and adjust your spending triggers

Week 4: Growth

• Make your first investment (even if small)
• Identify one skill to develop
• Plan next month’s improvements

Long-term Milestones:

• 3 months: Emergency fund of ₦50,000-₦100,000
• 6 months: Consistent budgeting and 10% savings rate
• 1 year: Diversified investments and skill development showing income impact
• 3 years: Strong financial foundation supporting bigger goals

Conclusion

The money mistakes Nigerians make show our greatest economic vulnerability and our most significant opportunity. As Nigeria works to unleash its economic potential through increased revenues and effective budget frameworks, individual financial literacy becomes a national imperative.

The question isn’t whether Nigeria can afford to improve financial literacy; it’s whether we can afford not to. Every avoided investment scam, every emergency fund built, and every diversified portfolio created contributes to a more financially resilient nation.

The money mistakes Nigerians make today determine whether we’ll achieve our economic potential or remain trapped in cycles of financial vulnerability. The choice, and the tools to make it wisely, are now within reach.

Your money story doesn’t end with past mistakes-it begins with today’s decisions. Choose one area from this list, take one small action this week, and start writing your financial success story.