By Azeez Quadri 
Sometimes you see people engulfed in a financial trap not because they don’t have a fair source of income that could sustain them, but because they either spend above their income or they take the wrong route by engaging in get-rich-quick ventures. You can cut corners to get financial freedom.
For instance, a civil servant whose monthly net pay is N200,000, but spends over 80% of that on partying and jewellery, may, after all plunge himself/herself into financial regret.
So, what are those financial mistakes you should avoid as much as possible to remain happy and secure your future?
1) Avoid putting your Money in a Ponzi scheme
A Ponzi scheme is a fraudulent investment web that is structured so that money from new investors is used to pay vague returns to earlier investors. They promise to double your investment by more than 50% within a month.
The acclaimed “returns” in a Ponzi scheme are not real. Simply put, it is like robbing Peter to pay Paul. The scheme collapses once there are no new investors or the operators are convinced they’ve dubiously made enough profit before they are caught.
According to reports, Nigerians have lost more than N1.3 Trillion to Ponzi schemes. Some of them include MMM (more than N18 billion lost), NNN Nigeria, Givers Forum, Pennywise Investment, CBEX, Fred and Farid Investment Company, Pocket Option, Value Growth Platform, BitFinance Global, Chinmark Group and the recent PXES, where Nigerians lost billions because of their greed to turn N50,000 into N200,000 within a month.
Ponzi schemes are a popular phenomenon among Nigerians; when one exits the market, another one enters, and some Nigerians will never learn.
Investing in a Ponzi scheme is the number one financial mistake you should avoid if you want to be happy. On the surface, it sounds sweet; on the inside, it is filled with lies, vague promises and regret. Do not invest your hard-earned money into an investment that promises you N2,000,000 for investing N1,000,000 within 30 days. Investment doesn’t work that way.
How to avoid Ponzi scheme investment:
When you see an investment platform or company that promises you large returns within a short period of time, copy the name of the company, go to the official portal of Nigeria’s Securities and Exchange Commission (SEC) to check the legitimacy of the company.
SEC is the only legitimate government agency saddled with the responsibility of licensing companies to sell shares or any other form of return-yielding venture.
In fact, some of them imitate the names of well-known companies to deceive you. Also, the fact a company is registered with the Corporate Affairs Commission (CAC) is not enough to prove that the company is legitimate.
Most of the known Ponzi schemes that have collapsed in Nigeria are registered with the CAC with different objectives or in most cases, hide under different names or operate completely online, making tracking a little bit challenging for law enforcement agencies.
So, when a company tells you it is registered with the CAC, also do a background check of their status on the SEC portal. You can also subscribe to SEC’s news updates to get notifications about new scams in the market.
2) Over Generosity and Spending Beyond Your Means
If you spend beyond your means or beyond your source of income, you might possibly be on your way to financial struggle. Don’t give because you want to satisfy people or because you want them to like you.
The Holy Books, both the Bible and the Quran, attest to giving. For instance, there are at least four Bible verses that support giving:
“It is more blessed to give than to receive.”
Furthermore, 2 Corinthians 9:7 says,
“Each of you should give what you have decided in your heart to give…”
Similar act of generosity can be found in Luke 6: 38, Proverb 11: 25 and Proverb 19: 17.
Furthermore, there are also Quranic verses that preach giving and generosity. The most prominent one can be found in Surah Al-Baqarah (2:261):
The example of those who spend their wealth in the way of Allah is like a seed which grows seven ears; in each ear is a hundred grains. And Allah multiplies for whom He wills.”
From the aforementioned Holy Books’ verses, giving is good, but not to the point of inconveniencing yourself and your immediate family. Only give when it will not affect your finances. Don’t be carried away by Bible or Quran verses; give moderately within your budget.
What to do to avoid overgenerosity
Generosity may be part of you; that’s fine, but have a budget for all your expenses. For instance, include what you plan to give out in your budget every month, just the way you budget for transport, data, wear, shoes, home appliances, utility bills etc.
3) Avoid Overspending on Housing
“If you don’t have a large family, you don’t need a four-bedroom flat,” a woman with more than 30 years of experience in marriage advised me and my wife when we were planning to build a house. She continued, “By the time the kids are grown and gained admission into higher institution or married, they will leave you and your wife.”
Having a taste for an exquisite house is good, but building on a large expanse of land may not be an economically brilliant idea unless it is structured to fit a commercial purpose. Doing so means you will be spending more on maintenance and utilities.
Consider the operation cost and what becomes of the house when your children are grown and take different career paths. They may never come back to spend a week with you when they are grown up and have gained admission into a higher institution.
What to do when planning to build a house
Before you build a house, consider the size of your family. If you are a family of five, including the children, a three-bedroom flat should be okay.
If you are a lover of building a house on a large expanse of land, you can build 2-bedroom units in four or more units within the compound so that you can rent them out when your children go their paths.
4) Avoid Taking Loans for Consumption
Loans should be used for an investment that will bring returns, but when you start taking loans for consumption, you are definitely on your path to poverty.
Payday loans that you use for consumption are “bad loans”; they don’t yield anything; rather constitute a burden on your finances.
How to avoid loans for consumption
Some of the ways to avoid loans for consumption is by living within your means. Find alternatives if you urgently need to fix things up, such as talking to family members and friends.
Reduce or cut expenses on things that are not immediately important. Draw a scale of preference (from the most important things you need to the lowest).
5) Betting With the Hope of Winning:
Betting, also known as gambling, is guessing an outcome of an event to win a certain amount of money if you guessed correctly. But if your guess is wrong, you lose the money you put down.
Betting comes in different ways, such as betting on which football team will win the Champions League between Real Madrid and Arsenal. Betting on who will win Nigeria’s 2027 presidential election.
According to data from Nigeria’s Securities and Exchange Commission (SEC), Nigerians spend an estimated N7.5 Billion on sports betting and gambling-related ventures every day.
The data further reveals that more than 60 million Nigerians between the ages of 18 to 40 gamble every day. Betting and gambling is a financial mistake you should avoid if you truly want to be in control of your life.
Betting for those who stake isn’t an investment, but it is for the gambling company founders. You are only gambling with the elusive hope of winning or doubling your stake. It is not guaranteed.
In most cases, you lose while the owner of the betting platform makes more money. In fact, most founders of the betting companies in Nigeria are billionaires.
The worst part, it is also found that a lot of people are addicted to betting such that if they don’t place a bet per day, they feel like something is missing in them; so, the more addicted you are to betting, the likelihood of losing more money and plunge yourself into financial difficulties.
How to avoid betting
Betting is one get-rich-quick scheme that drains your finances. Imagine you save N1,500 daily in your daily saving app instead of using it to stake; you would have saved N45,000 by the end of the month and at the end of the year, you would have N540,000.
It isn’t the small daily amount you spend every day that matters, but the accumulation of that money at the end of every year. Do the calculation to see for yourself the damage betting is causing in your life.
The addiction has even become worse because some of Nigeria’s banks have incorporated option to bet and gamble on their apps, but instead of betting, put the money into daily savings.
You will find an option for daily savings on Opay App, PalmPay etc. Betting will never make you a millionaire; stop it!
6) Avoid Spending Unnecessarily
You spend “just” N2, 500 for lunch in the office every day isn’t a big deal, really? You can afford it, that’s fine. But do you know you would spend less if you channelled that amount into cooking and packing your lunch from home?
If you channeled N50, 000 instead of the N75, 000 you spend on buying food outside to buying foodstuffs and preparing your lunch from home, you would not only eat healthier food, but also spend less at the end of the month.
By the way, you can’t be sure if the canteens outside follow the best standard hygienic recommendations in cooking.
Buy if your monthly net pay can accommodate such spending; that is fine, but for an employee who complains of poor pay, considering this advice may be a relief.
How to cut unnecessary spending
Have a budget. Avoid impulse purchases. Sum up your daily expenses in comparison with your monthly net pay to justify your spending.
7) Procrastinating about Side-Hustle
Economists say, “Our wants are insatiable” meaning the more money we think we have, the more our wants expand. It is in human nature to always want more and more. That’s why an employee will always want a pay rise.
What to do to augment your monthly salary
Start a side hustle; have multiple sources of income. Complaining will not change anything unless you take action to find other sources of income to support your current earnings.
Best part: The internet has simplified side hustles. You can have an online store on social platforms such as Facebook, Instagram, X (formerly Twitter) if you don’t have the financial capacity to incur expenses of maintaining an online store.
Remember, your monthly salary may never be enough to sustain you and your family; think about the side-hustle that will not affect your current job.
8) Overspending on Cars
Mobility is fine. It eases movement. But is the car something you can maintain? What about the fuel economy? Are the parts readily available when it is faulty? Is the car suitable for your terrain and the kind of work you do?
These questions are very important for you to reasonably cut spending. Must you change cars because your neighbour uses a new car? Overspending on cars is another financial mistake you should avoid if truly you want to have financial freedom.
How to avoid overspending on cars
A car is a depreciating asset. If your monthly salary is low, don’t buy a car you will not be able to maintain. If you are still struggling financially and the opportunity to own a car comes up, either through car loan, go for a car you can easily convert for commercial purposes.
Most of the civil servants in Abuja and Lagos use their vehicles for commercial purposes after office hours to complement their income. Buying a fancy car when your income cannot maintain it may be a wrong financial decision.
9) Not Taking Small Investment Seriously
If you think you can only invest when you become a millionaire, you are possibly not aware of the strategies of investing.
Some of the notable investors around today started small. You can start investing with as low as N5, 000. In Nigeria, for instance, you can buy stocks with as low as N5, 000.
How to start investing small
There are investment apps such as InvestNaija, Bamboo, AfriVest and lot of others you can download on your smartphone and start buying a fraction of stocks and shares.
Bamboo, for instance, makes it easy for Nigerians to invest in foreign stocks. As Dangote’s Initial Public Offer (IPO) goes live on September 14, 2026, check it out on investment apps. With N5K, you can invest in Dangote and other shares.
10) Not Having a Budget
If you don’t plan before spending, you may regret it after spending. Make financial planning a habit; it will save you a lot of headaches. You can’t live your life without direction. You should have a financial plan to avoid impulse spending.
What to do
Plan before you spend.
While some of these factors may be out of your control, it is wise to have a financial direction to make things much easier for you. Overspending may likely be the only problem you need to work on to be happy. Avoid the above financial mistakes to enjoy your life.
Tosin Opeyemi