Buy Now or Pay More Later: Lessons in Financial Literacy

Financial literacy, to my understanding, means being able to distinguish what your money can buy, what you can afford, and how best you can save and invest your money for the future. I recently came across a video discussing this topic; I began to reflect on my life and to realise all the finance decisions I have made in the past.

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There is a popular saying that if you cannot buy it twice, then you cannot afford it. But the situation of the country I am in changes that narrative to, If you don't buy it now, you will pay twice the money you would have bought it for. This is because inflation is on a constant rise and the prices of goods and services are increasing on a daily basis. Making good financial decisions is now a bit difficult and anyone can be prompted to buy what they need immediately, as fast as possible, before inflation hits the market.

A good example of this is my latest effect pedal that I bought. When it was released, it costs #130,000 naira. At that moment, I saw it, and I could buy it, but I could not afford it, so I decided to wait for a while before buying it. I never really found a time when I could afford it and I get pushing the time I would place an order for the item. What I had in mind was time; I would be able to afford it if I could pay for the product twice easily without sweat. So I had this in mind.

Unfortunately, that moment never came and when I went back to check the price of the item, it had gone three times the price I saw it last. I saw it at a price of 300,000 naira, which baffled me—almost 3x.

I immediately had to make plans towards getting it before I hear a story that touches on the price of the product. I did not even consider the fact of whether I could afford it or not; I went straight to buying the item, and this was even in the period when I was in a much more financially constrained situation. I had to look at it as a future investment because it would be helpful.

Now, I may be in Brooklyn, enjoying my moment of financial constraint but I know I will come back up soon.

Financial literacy also covers knowing your needs versus knowing your wants. I think one of the reasons why I didn't make the move towards getting the effect pedal in time was because I felt I didn't need it—that is, because I had one to use, which was not mine, at that moment. If I had felt that I needed it so much, I could buy it, though I may not be able to afford it; I would make the move towards purchasing the item based on the need for it.

Another scenario is my phone. I have been using my Android phone for almost 5 years, which is the longest period I have ever used a phone. Before, I had the mindset that I could not use a phone for more than 1 or 2 years max or I would change it but things changed. When the two-year period came and it felt that my phone was doing all I needed without needing anything from a new phone, I kept on using it even when there were periods I could afford changing it at a breeze.

So far, what I will say I need to work on is my saving and investment culture. Learning to save more, spend less than my income and also try as much to increase my income. Then maybe I will be in a much better financial state.