Financial Freedom Nigeria

Creating Wealth Now

Consumption is on a need basis


By: Lloyd Onaghinon


  • Consumption should be deliberate and with a focus.
  • Consumption patterns should support your savings and investment desire.
  • Consumption steals from your future if not properly channeled to contribute to the process of growing wealth.
  • The real cost of consumption is all the future streams of income and capital you would have benefited later on in life.
  • A N200,000 wastage today is worth N1.8bn in 50 years. That is the real cost.


Consumption is generally deemed to be done to attend to an immediate need or for sustenance. Consumption for individuals during the phase when we should be accumulating wealth should be with a focus on ensuring that we improve on our savings. Our consumption pattern should therefore encourage our savings pattern which should encourage the way we invest, our returns on investment and lastly, our net wealth created over a life time.

Consumption pattern is driven by our habits. It is therefore required that if we are keen on growing our wealth, we maintain a disciplined approach to consumption. Consumption here will include how our dependents also behave as it can have an impact on the balance we have to save and invest. How we lead them in ensuring we do not carry excess burden is also critical. The benefit and return on frugal consumption is increased wealth.

Let us take this to a different dimension. Nigeria as a nation grew its income up until the change in government. Oil prices seemed to have been at its highest during the past administration. However, a lot of spending happened with respect to items that do not build wealth but rather, what ultimately diminishes in value. In addition to that, we allowed relatives of the government or people in power to assist in taking away resources that could have been saved and invested. We are feeling the brunt of the spending spree now and hope we will be able to manage the next cycle of growth we encounter. It therefore boils down to how disciplined we are as well as our will to drive the right behaviour.

A small experience recently was that I woke up to realise that my diesel tank connected to my generation had a fault that led to a leak. I had just filled the tank the day before. A simple continuous maintenance check would have led to my identifying the weakness in the connector that ultimately gave way. The process of replacing the diesel was painful because of the time, energy, cost, inconvenience and the thought that I just purchased diesel the day before in an era of scarcity…hmmm. If the money spent on another round of diesel was used to purchase shares or put in a thriving business that ends up growing, the outlook over a 20 year period would run into millions of Naira. That is the real opportunity cost that has been lost as a result of my not being deliberate enough to maintain or keep an eye on my diesel connector.

The question I have therefore is how many opportunities have we squandered and not really estimated the cost appropriately but trivialised same? We need to begin to really check our expenses because the real cost is the time benefit we would have gotten if we had put the money to good use and over a long period. Time is therefore a topic we will address when discussing the principle of compounding later on.

Suffice it to say that the real loss when we fritter our resources away in unbridled consumption mania is the lost opportunity in the future which we assume does not currently exist but will never come to fruition because the resource that would have created it has been wasted.

Consumption patterns should therefore be monitored and we should always look for opportunities to ensure we save enough to leave for the next generation.

Note that 200,000 invested to achieve 20 per cent returns annually in a small business that grows over a 50 – year period will amount to N1.8bn. That is the cost of wasting that sum of money today. That is the cost of living up to an additional 50 years without that N200, 000 at inception.



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