Understanding Money and Finances: Critical Concepts Every Female Graduate Should Know 

According to EfinA’s 2020 Access to Finance survey, low financial literacy is a major barrier to financial inclusion in Nigeria. Millions of Nigerians have neither bank accounts nor wallet accounts with mobile money operators. Women in particular are among the most vulnerable groups with 29.3 million women financially excluded. 

Low literacy rates dramatically impact the lives of women, demanding they work harder, take more time to pay debts and, sometimes settle for earning less. The World Bank reports that 38 million Nigerian adult women possess literacy skills below a “basic” level. This lack of education makes it difficult to understand bank statements, credit card agreements and other financial documents, further exacerbating their exclusion.

The good news is, financial literacy is not rocket science. In fact, it’s one of those concepts that are easy to learn, but a lifetime to master. Experts believe delivering financial education to students is a great way to improve the financial inclusion rate as well as the financial health of Nigerians in the long term. 

Financial Literacy has 5 major principles / pillars:

Earn – Spend – Save – Borrow – Protect

Earn: Understand your income and income streams

Money is about value. 

Students have a unique relationship with money which is akin to that of Santa Claus/Father Christmas. With zero earning power, they rely on their social circle for money – parents, uncles and aunts, friends etc. 

This relationship can create unrealistic expectations regarding how money and personal finance works outside the context of school. 

Perhaps, the most important money lesson for every student/graduate is that money represents value and money travels in the direction of value. 

  • Employees earn income because they have skills their employer needs to run the business. 
  • The market woman gets paid because buyers need her wares. 
  • The pizza restaurant makes profit from selling different kinds of pizza. 

You get the idea. 

In the real world, people will give you money if you can offer something valuable to them. This means you don’t even have to wait till you’re out of school before creating or offering value. Offering skills, time and knowledge to those in need of it can become another source of income for you. 

This is where the concept of multiple sources of income comes into play. And with the increasing demand for skilled workers, educated and skilled young women have more opportunities to increase their income. 

Having multiple sources of income is a good thing. It means you will have more money to spend and save. So while you still enjoy the benefits of getting pocket money/allowance from your parents or guardian, try to earn some money of your own. 

Spend: Creating a personal budget

There’s a shopaholic lurking within all of us. With such easy access to multiple online stores, it’s never been so easy to spend money. And let’s face it – spending money feels good. 

Maybe too good. 

It’s easy to overspend and end up broke and stranded. And that’s why we use budgets. 

A budget is necessary for effective management of your finances. Billionaires, multinationals, even countries have budgets. And why not? It works! 

A budget is an estimate of how much you intend to spend over a period of time, based on the amount of money available. Put another way, a budget is a plan of how you intend to spend your money. Basically, you want to reduce/limit how much you spend (thus, discounts, sales, coupons and special offers should be on your priority list).

Budgeting (the act of using budgets) helps you create financial stability. By tracking your expenses (how much you’ve spent) and following a plan, it is easier for you to stay on track for your short term goals as well as long term. 

Speaking of goals…

Save: Determining your financial goals

Saving is one of the most fundamental (and most repeated) bits of financial advice you will receive. 

The same way gambling can become a habit over time, saving can also become a habit. And unlike gambling, a savings habit always yields positive outcomes in the short and long term. For young women in particular, building savings early in life can make a lot of difference. Particularly for women, having savings is critical to long term financial health. Research has shown that access to savings accounts not only increased their savings, but also helped improve women’s investment and decision-making power in the household

Setting financial goals and saving towards them is a simple and powerful way to develop a saving culture and set yourself up for future success. For example, if you need a new phone, instead of asking your uncle for a new one, you can develop a savings plan (say N10,000 per month) for 3 months and get yourself that phone. 

Why save? Savings are important for two major reasons – for emergencies and opportunities. 

A financial emergency is any unplanned expense or loss of income. For example, your phone could get lost or stolen. Setting aside some money in a designated “emergency fund” will give you peace of mind, and also a “cushion” during periods of such financial stress and uncertainty. 

The same goes for opportunities. Life is full of them. Using the phone example, your friend may want to sell a fairly new phone at a heavily discounted price due to an emergency. If you don’t have the money at hand, you’d miss out on a great deal. 

Secret tip: when you have cash, you can usually negotiate better deals during emergency sales. So if you’re yet to begin, start saving today.

Borrow: Credit and loans

Contrary to ancient wisdom, borrowing money is not bad. Even rich people borrow from time to time. In modern finance, debt isn’t bad, but bad debt is. 

What makes a debt good or bad is the purpose of the loan. If you borrow money to enhance yourself in an important way, it is a good debt. For example, borrowing money to earn a certification or learn a new skill that employers want falls under good debt because it has the potential to improve your ability to get a job and earn more income. 

Bad debt involves borrowing money to purchase things solely for the purpose of consumption. For example, borrowing to buy the latest iPhone or a fashionable handbag. 

Today, beyond banks, different financial service providers offer loans at different interest rates. The interest rate is the amount you are charged for borrowing money, calculated as a percentage of the total amount of the loan. The higher the percentage, the more you have to pay back. For example, if you borrow N100,000 at a rate of 20%, you will have to repay N120,000.

When borrowing, you want to hunt for the cheapest / lowest interest rates from CBN approved credit providers.

Debt can be a good servant but a bad master. When borrowing money, you should have a rock solid repayment plan. Be realistic about how long it will take to repay the money you borrowed. Bad debt can ruin your financial future if you’re careless. 

Protect: Investing 

Investing means using your money to acquire an asset or item with the intent that it will generate income or increase in value over time. 

A brand new wristwatch is not a good investment because over time, it will lose value and its resale value is also limited. On the other hand, investing in stocks or real estate is an investment that will yield benefits in the long term. 

People invest for two reasons – to protect their money from inflation and to grow their money and increase their spending power. 

In the year 2000, a regular sized piece of bread cost about N50. In 2010, the same size of bread cost N150. Today, it costs about N500. The cost of producing that piece of bread keeps increasing. So the seller will gradually keep increasing the price of the bread year on year. 

That’s inflation and it’s something you should be mindful of. 

Inflation is ‘bad’ because it erodes your purchasing power i.e. you have to spend more for the same item. 

Inflation works with time. 

Fortunately, investing also works with time. 

Investing protects your money from inflation. A really good investment will increase in value significantly over time.


Being empowered to make good financial choices is called financial literacy, and it’s something that every adult needs. Depending on the stage of life you’re at, each of these pillars will take different dimensions. However, the core principles remain the same and form the foundation of a healthy financial life.



Posted on

February 17, 2023