Making Money Work for you as a Gen Z Professional Living In Nigeria
I recently had a conversation with a friend where I encouraged him to consider investing in stocks. I pointed out that he could start with as little as 10,000 naira for a fraction of an Apple or Nvidia stock. He was genuinely surprised by the idea that investing doesn’t require a large sum of money. This isn’t the first time I’ve seen this lack of financial awareness among my peers. This article is my attempt to change that.
Here, I’ll explain the ABC of financial literacy — Budgeting, Savings, and Investing — as essential tools for Gen Z professionals in Nigeria.
Disclaimer: I’m no expert; these insights and lessons are from years of researching, reading, and practicing advice that has yielded invaluable results.
Investing in the S & ME
Before exploring the idea of financial literacy, you need to first MAKE MONEY!
If you don’t have a source of income at the moment, your priority should be acquiring a valuable skill. This could include tech skills like software development or product design, traditional skills such as carpentry or plumbing, or artisan skills like makeup artistry or fashion design. The key is to focus on skills that are in demand — ones that people consistently need and value — whether they generate income directly or enhance your marketability.
The concept of investing in your skills first, often referred to as investing in the “Skills and Me” (S & Me) before the “Stocks and Portfolio” (S & P), is crucial. It recognises that to make more money, you need to offer value. Therefore, prioritise developing skills that can provide tangible benefits to others before venturing into financial investments.
Person no fit build house without blocks…
Budgeting
Now that you have a steady income — whether from a job, your business, or freelancing — let’s talk about budgeting. This means planning how you spend your money each day, week, and month.
First, list all your expenses, like rent and food. Then, divide them into needs (essentials) and wants (nice-to-haves, like eating out or movie subscription plan).
Next, prioritise savings. Decide on a percentage of your income that you can comfortably set aside. A widely used method is the 50/30/20 Rule: allocate 50% to needs, 30% to wants, and 20% to savings.
For instance, if you earn around 250,000 Naira, allocate 125,000 Naira to needs, 75,000 Naira to wants, and 50,000 Naira to savings. Adjust these percentages based on your circumstances, but ensure you allocate something for savings to build financial security.
Remember, budgeting is more than just making a list — it’s a tool to help you spend wisely and develop discipline over time.
Savings
Remember when we talked about savings during budgeting? Well, there are different reasons why you should save. Here are the top three crucial ones:
Saving for a Goal AKA Target Savings: This type of saving has a specific purpose. Maybe you’re saving up for a summer vacation, a new laptop, or a phone. Once you reach your savings goal, you’ll use the money for that specific thing.
Emergency Fund AKA Shege proof fund: This is crucial for unexpected situations like losing your job or unexpected expenses like car repairs or a broken AC. Life can be unpredictable, and having an emergency fund helps you stay stable during tough times. Ideally, aim to save at least six months’ worth of your monthly expenses in your emergency fund.
Retirement Planning: None of us want to work forever, right? Planning for retirement allows you to enjoy life after work. In Nigeria, we have pension accounts known as Retirement Savings Accounts (RSAs), similar to the 401(k)/IRA in the US. You can open an RSA to save money for retirement. RSAs are familiar to those working with the government, but even if you work in the private sector or are self-employed, you can still own an RSA through a Micro Pension Plan.
The Micro Pension Plan operates similarly to a typical RSA: you have a dedicated retirement account, receive RSA credentials, you get dividend returns, and it is managed by a Pension Fund Administrator (PFA). The key difference is that employer contributions are not mandatory for the Micro Pension Plan. If you later join a workplace that supports RSAs, you can always switch your personal RSA to a regular employer-backed one.
Here are some crucial rules to know before opening a Retirement Savings Account (RSA) in Nigeria:
- Age Limit: You can open an RSA from age 18, but contributions become mandatory at age 20.
- Withdrawal Rules: You can withdraw up to 25% of your contributions if you are temporarily out of employment. Full withdrawal is allowed only at retirement (age 50 or older).
- Portability: You can transfer your RSA to a new employer or Pension Fund Administrator (PFA) if you change jobs.
- Death Benefit: Your beneficiaries can claim your RSA balance if you pass away.
- Retirement Options: Upon retirement, you can choose between programmed withdrawals, annuities, and lump sums.
- Penalties for Early Withdrawal: Withdrawals before age 50 may attract penalties and taxes, depending on the circumstances, except in cases of disability or critical illness.
Ehmmm, Semira I want to invest in my future but RSA is a bit stringent o I want the flexibility of investing in my future. If you’re in this boat, this is where investment comes in.
Investment
Before I share my two cents on investment, I need you to understand my investment persona. Just in case you don’t see me advising on investing in crypto or fixed income, you’ll understand why.
- I’m a Muslim woman: This means I engage in only riba (interest)-free financial activities.
- Responsible and sustainable investing: This aligns with my personal values. I invest in Halal businesses or those that adhere to Halal principles — prohibiting investments in activities like gambling, alcohol, and pork production.
- Low/Medium Risk Investor: Over time, I’ve studied and gauged my risk appetite and understand the level of losses and wins I can afford.
Now that you understand my principles and values, here are some low/medium risk investment recommendations:
- Invest in the S&P 500: This is one of the easiest and low-risk stock options available. Even the greatest investor, Warren Buffet, approves of it. When in doubt, invest in the S&P 500, and here’s why: it is one of the safest yet rewarding options. The S&P 500 is a stock market index that contains 500 of the largest publicly traded companies in the world, including Apple, Nvidia, Amazon, JP Morgan, Johnson & Johnson, and Coca-Cola. This index spans various fields such as technology, health, retail, etc., making it a very safe bet.
- Gold Investment: This one is specifically a strong advice for my ladies! Buying gold jewellery is the easiest way to invest. I like to call it the safe-haven asset. Gold appreciates over time, and you also get to rock it as a beauty piece. It looks like a win-win to me. Aside from gold jewellery, you can also consider investing in gold coins and ETFs.
- Mutual Funds: Mutual funds are investment pools where many people contribute their money to invest in a diversified portfolio of stocks, bonds, or other assets. These funds are managed by professional investment managers or teams who make decisions on behalf of the investors. I love this type of investment because you’re not doing it alone, and you have professionals handling your money for you.
Remember, investing requires patience. Avoid expecting quick returns and let your investments grow over time. Wait at least three months before evaluating your investments, and consult with financial experts for personalised guidance.
Investment & Saving platforms for Nigerians
Now that we have talked about how to spend, save, and invest your money in a better way, let’s discuss tools that will make this easier and seamless, using Nigeria as the location context.
Apps for Investment
Bamboo: My go-to app for investing is Bamboo, and here’s why:
- They provide personalised recommended stock options based on your risk appetite.
- You can follow the portfolios of well-known investors. For example, I’ve added some stock options to my portfolio from Warren Buffet’s portfolio because if Warren, the billionaire who made most of his money from investments, is investing in certain stocks, those stocks most likely have potential.
- You can start investing with as little as 15,000 Naira or $10.
- You can also explore Nigerian stocks like Dangote, BUA Foods, and GTCO.
Trove: Another recommended app is Trove. While I haven’t tried it personally, it’s well-loved by many. Like Bamboo, you can invest in stocks, but it operates on a subscription basis.
Apps for Mutual Funds
Cowrywise: My personal recommendation is Cowrywise. Here’s why:
- With Cowrywise, I can use one stone to kill two birds. I can invest in Halal mutual funds and also save up for emergencies. Cowrywise has an emergency savings feature that helps you calculate the needed emergency savings based on your monthly earnings. It’s very seamless to use and set up.
- Asset Management Companies: Another option is to sign up with asset management companies like ARM Investment Managers or Meristem Wealth Management for mutual fund investments.
Apps for Savings
Piggyvest: I 100% recommend Piggyvest for savings. Here’s why:
- You can do target savings, meaning you save for a particular goal.
- It has an Riba-free button where you can disable interests for my fellow Muslim savers.
- You can automate your savings with recurring frequencies like daily, weekly, or monthly.
- You can save money for your rent with a dedicated bank account provided for you.
- They have been long-term players in the game, providing me and many Nigerians with peace of mind.
Platform for Retirement Savings Account
ARM Pension Managers: Here are 3 reasons to consider them:
- They have over 15 years of experience in managing pensions.
- They were among the first seven Pension Fund Administrators (PFA) licensed by the National Pension Commission in December 2005.
- They are known for being digital-friendly (Gen Z Approved).
Stanbic IBTC Pension Managers: Here are reasons you should consider them:
- They have over two decades of experience in managing pensions — 20 years!
- As a millennial at heart, I trust traditional banks, especially one with a long-standing reputation like Stanbic IBTC Group.
- I particularly love their pension calculator feature. It calculates your estimated RSA balance based on your current monthly income and your planned retirement age.
- They are known for being digital-friendly (Gen Z Approved)
Remember, the journey to financial freedom begins with small, consistent steps. Start today, regardless of your current financial situation, and commit to learning and growing along the way.
Cheers 🍻 to a financially conscious generation!
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