By: Ola Pat
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Alex Iheanacho is a financial researcher and data analyst of repute. He studied Accounting at the Abia State Polytechnic and later proceeded to studied Applied Economics and statistics at the University of Benin. He is the founder of Finance Academy, from wherein he helps individuals improve their income potential, save and multiply their savings through money strategy and a method he called the “psychology of possibility”. He is a writer and an inspirational speaker but Commune Magazine in this two parts chat asked Alex to do what he knows how to do best, provide financial roadmaps and strategies necessary to weather the current Nigeria and indeed the world economic storm as part of our 2017 Self-Development Series.
How does depression affect personal budgeting?
Well, one common thing that the depression will do to people is to “disbalance” them financially. That will mean that many people might not have enough anymore to support their livelihood. A lot of people might lose their job or have their income source wiped out. This will cause some sort of financial anxiety and eventually makes the person not to even remember their financial goal let alone a budget. This is normal with depression. But things are not usually as bad as they seem
“A recession doesn't necessarily mean that there is no money, it simply means that the economy goes into correction thereby making money to exchange base.”
What steps should people take in an economy like this?
In such an economy, the following steps can be taken:
1. Become creative on how to improve your income sources. Mono income will hardly work in such an economy. Hence, the best is to multiply your income source. You can get a side gig, you can start a side business, you can get into network marketing etc.
2. Start a business. Just as funny as it sounds, starting a business can really be one of the best steps in a recession. Most of the renowned companies of today were all born in recession. In a recession, people become hungry for new solutions. Anyone who can bring cheaper and better things has a business. A recession doesn't necessarily mean that there is no money, it simply means that the economy goes into correction thereby making money to exchange base. The problem is that people still try to serve the same clients they were serving before the recession. No, you have to find the new people with the money and propose strong values that will make them give you the money.
3. Avoid fear. The negative consequences of a recession are more driven by fear than the recession itself. Panic and anxiety made people make poor money choices, which resulted in a self-fulfilling prophecy. So, stay away from the news and panic of the crowd and seek your own clarity and direction.
4. Invest in "bear happy" business that is businesses that do well in a bear economy (A slowing economy) and entertainment businesses and industries. Investment is cheap during a recession. In fact, after every recession, new billionaires are usually born and they are those people who took their cash flow and invested it in the following businesses consumable, household goods, clothing, entertainment, liquor stores, or betting etc. These kinds of businesses do very well during a recession.
5. Learn some new skills especially technologically related ones. People who will make it in this era are those with the 21st-century skills and that is tech. I explained this more in my upcoming book, wealth creation in the 21st-century.
6. Become financially intelligent. You can't ignore this anymore. Financial intelligence is your ability to manipulate financial outcomes and decisions to your advantage. There are many components to it which I also explained in details in my upcoming book title, financial intelligence: how to win the game of money. Some of the components of financial intelligence include the ability to read and understand financial numbers, financial patience, financial education, Mastering market emotions, Mastering and using business corporations, financial faith, mastering the use of business laws, mastering investment rules, mastering the use of common sense in business decisions etc. All these can't be ignored anymore. The economy is undergoing a correction and only those who have taken their time to become financially intelligent will profit when it finally comes around.
7. Learn to spend with a budget. No matter how little amount you have, learn to spend the money through a budget. This helps you track your expenses.
8. Save. No matter how small, always save. Wealth creation is both an act and art. Saving is the act while what you do with that savings is the art and the funny thing is that you can't master the art without first of all mastering the act. So, drop the excuse and save something
9. Learn to delay gratification. Now is no more the time for you to buy anything that pleases you. You must learn to push away some things from your spending list.
10. Spend only on your needs and not on your wants.
The problem is that people are not patient. They want quick fix and money issues don’t just fix themselves.
There are lots of financial seminars but no financial improvement in the lives of the attendees. Why?
The reason why the people are not getting a solution from their attendance of financial seminars is that many of them are not addressing the root cause of the problem which is the mind. The money problem is 80 percent mindset and 20 percent techniques. Most of these seminars just come to tell people how to make money without first reaching into their mind to make it fertile enough not just to absorb the information, but to also use it. Another problem is that people are not patient. They want quick fix and money issues don’t just fix themselves. Financial problems result from accumulated mistakes which you don't just wake up and wipe away. This is why in my training, I first talked about the psychology of financial possibility. For a seminar or whatever to help the participants to get results, the mind must first be touched. It takes time for you to re-engineer the problems if you must get results. Another thing is that what many people are teaching is just Ponzi schemes. They come to tell you how to make money without working for it. You just put money away somewhere and it multiplies without any underlying asset to make it so. Another reason is because money solution is not a one fits all kind of solution. To help someone solve his money problems, you must first understand his peculiarities and then give such a person a tailor made solution, which might work only in such a case. When you try to use your own solutions to advise someone else, the result might not be as expected because what works for A might not work for B as their needs and peculiarities will differ greatly.
So, what should people look out for in a seminar?
What people should look out for in seminars are specific solutions that can be used to start from where the person is and will get him/her to the final financial destination. If a seminar doesn't teach you something you can use immediately, everybody's time has been wasted. Have an open mind in every seminar and look out for just one thing you can implement asap. This is why you should know what you need at any point in time and go to seminars that will deliver that information to you.
Look out for Part II
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