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How well do Nigerians know their financial statement?

The Nigerian Living Standard Survey (NLSS) is the official survey that is the basis of measuring the poverty and living standards in the country. The latest round of NLSS conducted by the National Bureau of Statistics (NBS) between September of 2018 and October 2019, revealed over 82.9 million Nigerians are considered poor by national standards. 

 

The so-called poverty line in Nigeria is often used to categorise Nigerians into; elite-class, middle-class and the poor masses. As the years go by, there has been a drastic fall from the middle-class citizens into the circle of poor masses. One can’t help but wonder why this is so, because the nation is so blessed with abundant human and natural resources, that if properly managed can salvage the poverty state of its citizens. 

 

In situations like this, accusing fingers are always pointed at the Federal government and our policymakers. Yes, to a large extent, they have a hand in our situation. But, come to think of it. What about the citizens themselves? How well do they managed the little money they have, how well do they know their financial statement? So, what then is an individual’s financial statement.

 

A personal financial statement is a document that shows the strength of an individual’s financial muscle. That is whether or not you are on track with achieving your financial goes or retrogressing. Many Nigerians don’t even know what their financial statement is or its constituents. Two things make up a personal financial statement; cash flow statement and the balance sheet.

 

A cash flow statement has to do with the money an individual earns (inflow) like; salary, return on investments etc., and how the income is used (outflow) and the difference between the inflow and outflow(net cash flow). The balance sheet on the other hand is an individual’s net worth, which is the difference between an individual’s asset minus the liabilities. 

 

Cash flow and balance sheet work together because your net cash flow from the cash flow statement  helps to increase your net worth. If your net cash flow is positive, it means you earn more than you spend. The money from your positive net cash flow can be used to purchase assets or even pay off liabilities, thereby increasing your net worth. The same can’t be said if your net cash flow is negative.

 

Majority of Nigerians especially the youths have not been able to differentiate their wants from their needs and it explains why majority of their spending is basically on frivolities. Being able to identify your needs and arranging them on a list of importance, urgency and affordability, will greatly help to checkmate your spending habits.

 

Blaming our leaders is not enough to salvage Nigerians from this mess we called poverty, but it’s high time we also check ourselves. Always ask yourself this questions; “Am I spending on frivolities? Do I live on a budget?”. Until we sincerely answer these questions and do the right things, we will keep hoping for the government to salvage our situation and poverty will keep eating us deeply.

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