WHY MAKING MONEY AND KNOWING HOW TO MANAGE MONEY ARE TWO DIFFERENT THINGS
Posted: Thu Oct 15, 2026 8:59 am
A common misconception is that financial problems disappear automatically when someone starts earning more.
Unfortunately, that’s not always true.
Someone earning ₦300,000 can struggle.
Someone earning ₦1 million can also struggle.
Even someone earning ₦5 million can live from paycheck to paycheck if their expenses constantly increase with their income.
This is called lifestyle inflation.
For example, someone earns ₦300,000 and spends ₦280,000.
Later, they get a better job and earn ₦700,000.
Instead of increasing their savings, they upgrade their lifestyle until they’re spending ₦650,000.
Their income increased dramatically, but their financial security barely improved.
This is why financial education matters.
Financial success isn’t simply:
“How much do you earn?”
It is also:
“How much do you keep?”
“What do you do with what you keep?”
“How much debt do you have?”
“Do you have emergency savings?”
“Do you have skills that can increase your income?”
“Can your finances survive an unexpected problem?”
A financially responsible person doesn’t necessarily need to be extremely wealthy.
They need to understand their financial situation.
One useful approach is to divide income into different purposes:
* Essential expenses
* Savings
* Investment
* Personal spending
* Skill development
* Emergency reserves
The exact percentages depend on the person’s income and circumstances.
The important principle is to avoid spending every naira simply because you have it.
Another important lesson:
Don’t confuse assets with liabilities.
Buying something expensive doesn’t automatically mean you’re becoming wealthy.
An item that continuously takes money from you may not improve your financial position.
The goal is eventually to build things that can create value or income.
That could include:
* A profitable business
* Valuable professional skills
* Investments
* Intellectual property
* Productive equipment
* Other legitimate income-generating assets
Unfortunately, that’s not always true.
Someone earning ₦300,000 can struggle.
Someone earning ₦1 million can also struggle.
Even someone earning ₦5 million can live from paycheck to paycheck if their expenses constantly increase with their income.
This is called lifestyle inflation.
For example, someone earns ₦300,000 and spends ₦280,000.
Later, they get a better job and earn ₦700,000.
Instead of increasing their savings, they upgrade their lifestyle until they’re spending ₦650,000.
Their income increased dramatically, but their financial security barely improved.
This is why financial education matters.
Financial success isn’t simply:
“How much do you earn?”
It is also:
“How much do you keep?”
“What do you do with what you keep?”
“How much debt do you have?”
“Do you have emergency savings?”
“Do you have skills that can increase your income?”
“Can your finances survive an unexpected problem?”
A financially responsible person doesn’t necessarily need to be extremely wealthy.
They need to understand their financial situation.
One useful approach is to divide income into different purposes:
* Essential expenses
* Savings
* Investment
* Personal spending
* Skill development
* Emergency reserves
The exact percentages depend on the person’s income and circumstances.
The important principle is to avoid spending every naira simply because you have it.
Another important lesson:
Don’t confuse assets with liabilities.
Buying something expensive doesn’t automatically mean you’re becoming wealthy.
An item that continuously takes money from you may not improve your financial position.
The goal is eventually to build things that can create value or income.
That could include:
* A profitable business
* Valuable professional skills
* Investments
* Intellectual property
* Productive equipment
* Other legitimate income-generating assets