For young African women II: How to build wealth at every stage of your life

young african women

In Part One of How to Build Wealth at Every Stage, I discussed how to build wealth at the younger stages of life, from childhood to 19 years old. Here I discuss how to build on those stages.

Stage 3: The Young African Woman

This is known as the accumulation stage and is typically between ages 20-30/35. At this point, a person has just graduated or has started working and has some disposable income. Income is typically larger than expenses at this stage. Some may live with their parents while some may begin to consider getting their own accommodation.

This is also a stage when people begin to think about settling down etc. This is the best time to begin to develop a personal financial system. The earlier you start the more time you have for your money to grow and enjoy the benefits of compounding.

I love Albert Einsteins quote which says “Compound interest is the eighth wonder of the world. He who understands it, earns it…he who doesn’t pays it”. Basically, compounding interest simply means that the money you earn as interest is put back into your account or investment thereby allowing your money to grow faster. An individual at this stage should develop a savings and investment culture, learn and practice the principles of personal finance which is budgeting and also consider setting up an emergency fund. In terms of investing, this is a good time to invest in riskier assets and take advantage of long term growth opportunities.

 

You can also begin to buy valuable jewelry like gold, which appreciates over time and can be sold when cash strapped. It is very important to withstand peer pressure at this stage. Focus on your vision and goal.

Key things to consider at this stage include:

  1. Have a vision board
  2. Set financial goals
  3. Prepare monthly budgets
  4. Establish a savings culture
  5. Invest in the stock market
  6. Pay off any debts accumulated in University such as student loans, credit card debts etc
  7. Invest in yourself.
  8. Start a business

Stage 4: The African Woman

This is called the Consolidation stage and is typically between ages 30/35-55. At this stage your expenses are rising higher than your income. You may be married or starting a family. You may have moved out of your parents’ home and live on your own. Needs include education for kids, rent, mortgage, planning for retirement, higher education etc. Financial discipline is required at this stage.

It is important to be strict with budgeting and not forfeiting savings and investments. In terms of investment it is also important to begin to diversify your portfolio. This is also a good time to take some risks depending on the side of the spectrum you fall on.

Key things to consider at this stage include:

  1. Set up an education trust fund
  2. Buy land and or get a mortgage
  3. Health insurance
  4. Life insurance
  5. Build up your assets
  6. Plan for retirement
  7. Create multiple streams of income
  8. Invest in yourself

It is also important to note that you are never too old to dream. Mrs Betty Irabor started her magazine at this stage. Mo Abudu  started her tv station, Ebony Life TV in her late forties.

Stage 5: The Older African Woman

This is called the retirement stage and is age 55 and above. At this stage most individuals would be getting ready to retire or be retired. In most cases there is no steady income except from pension allowances. Needs include healthcare, retirement home, and vacation, maintaining a standard of living, estate planning and leaving a legacy.

A woman who was financially intelligent in her younger years will enjoy this stage. She may have set-up a business that is running on its own and therefore be enjoying the fruits of hard work during her youth.

This is also a time to ensure you are fulfilling purpose and at this stage you may even start a new business.

Please note that these age ranges are just a generic template and not cast in stone. Individuals may past through these stages at different ages.

Once you have determined the stage you are in your financial life cycle, it is important to set financial goals and to determine action steps required to achieve your goal. An important point is to ensure that you create a plan to achieve this goal and that your plans are as flexible as possible.

For example you could have a goal to set-up an emergency fund of 6 months’ worth of living expenses by 30/12/16.

Action Steps:

∙         Track spending

∙         Create a budget

∙         Pay-off all outstanding debts

∙         Reduce excess spending on eating-out and eat home-cooked food

∙         Reduce spending on aso-ebi

∙         Set up direct debit with bank

What are some of your goals for your financial future? What phase of life do you find yourself in? Could you begin to implement some of these key elements now?

10 excuses to give friends when you are too broke to go out

As Motherland Moguls, we know that every kobo, pesewa, and cent counts while chasing your dreams. So while we love our friends, going out often can be a financial burden. If you’re fortunate (or unfortunate – you choose) enough to live in an isolated town where eating out requires an hour commute to the city center, then you must be doing your fair share of saving.  If you live in a major city – Lagos, Johannesburg, Nairobi – that new pop up down the road that sells overpriced cereal is tempting.

To add to all of this, we all have that friend who always wants to eat out. But there are days when you really know you cannot afford to go out but don’t want them to know you’re skint. Yes, we know that, cause we’ve been there and had to come up excuses like 10 below.

1. “I didn’t do my BVN so my card is not working”

See Your LifeThis applies if you live in Nigeria, or all your money is deposited in a Nigerian account. If that is the case, you have the new banking policies to thank for this excuse.

2. “Oh, I’ve been eating at *insert restaurant name” too much”

RHON - Eating feelings

This excuse could come back and bite you, as it insinuates you go out to eat often.

In the same vein, you could be left with the burden of deciding what restaurant, which leaves you with two options: either suggest somewhere so awful that you know nobody would agree to venturing near, or suggest something completely different and free!

3. “I forgot my card at home”

Kandi - RHOA Really

This only works if you are actually out and about with them, or in their house and you have not brought out your card at all. This also means if you are dying for a bottle of water – no can do.

4. “Sorry, I have an appointment/meeting.”

Mad Men - Tell Them Im In A Meeting

Please do not Snapchat anything other than your coffee mug after making this excuse.

5. “Oh my gosh, I wish you had told me earlier, I just ate and I AM STUFFED!”

Zendaya - gif

This works better with people who do not know you that well. Why? Because if you love food the way I love food, then your friends know the truth and will know you’re lying.

6. “I’ve been really busy, and need to take time out to rest”

Pokemon falling asleep

I like this one because even if all you’re doing is watching show re-runs with a tub of ice-cream, it makes you sounds somewhat important and occupied with life.

This is less of an excuse and more of a genuine reason. Again, stay away from Snapchat.

7. “My parents want me home”

African dad meme

This excuse varies in effectiveness based on your age. But if you and your friends are from traditional African homes, I’m sure it would have a decent level of effectiveness.

8. “I’m not feeling too well” – ties in with number 6

I’m slightly wary about this one because it may come to pass. However, if you’re have a little headache, a little exaggeration would not hurt.

9. “Stuck in school/work/at a family event… rain check?”

Tommy from Martin - straight out of work

It’s always nice when an excuse has a reason behind it, followed by the possibility of rescheduling. This is probably the most respectful of the bunch.

10. * Phone on flight mode * “Did not get your call/message, my phone just does that.”

Big Sean - looking at phone

Not a big fan of this one. I think we can all agree it’s pretty rude. But a friend suggested this and it worked. It also helps to remember all the money you are saving from ignoring those calls and messages…

Business Tip: Anytime you cancel on your friends, put that money into your savings accounts. It always pays to pay yourself first, ladies.