Having A Sound Financial Plan

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Having a sound financial plan is simply been prepared for today, the future and the financial emergencies in between.

There are many people who have squeezed themselves into a financial tight corner. They leave no room for unplanned expenses. My dad's financial management style is like that. All the money that comes in must go out-- into projects, investments and expenses. Whenever an emergency occured he always had to borrow money because his monies were already tied somewhere else. And recently he had to get a microfinance loan for a ridiculously small amount because an unplanned expense showed up. I have now taken it on myself to be a financial adviser to him. 

Emergencies will always come but they necessarily don't mean you always have to run up and down for financial aid. Have an emergency fund/account. And the more people you cater for the more money you have to set aside in it. It is an account you should never touch except there is an emergency and must be replenished as quick as possible.

And that's it for the emergencies part.

Many of us already take good care of today. We go after well paying jobs, we do some side hustling, we try to get as much money today as we can. Where we often have problem is with preparing for the future. Deliberate plan for 10, 20 years from now. Life after retirement. And how to set aside money got today for the very faraway future.

I see too many people using the wrong strategies to prepare for the faraway future. Like keeping money in a savings account, considering pension as the main/only way of planning for the distant future (not considering the years between now and retirement) and blindly handing over their money to other people.

So how do you plan for the future?

First there is no straightforward answer. That is why there is an entire multi-billion naira industry on investment and wealth management. I do get asked a lot  "Which investments should I make?", "What is the investment return?" etc.

The first thing you have to know is that with long-term investment vehicles there are no guaranteed return on investment. And except you are a seer (with ability to see the future in the investment world) you can never know which ones will get you the best return or which will even fail. They is no shortcut to long-term investment and you have to keep working to make sure your investments are still sound (portfolio review). It is a lot of work even when you have all the foundational knowledge. So I often don't know what to tell people when they ask me those questions because they are expecting a sure-fire one time approach to use and expect excellent results forever. 

Planning for the future is indeed a continuous work and involves a lot of emotional maturity. You have to close your eyes to short term strategies. You need to have the right mindset that distinguishes between what will be a long-term winner and what will be a short-term winner.

If all of this is too much hard work. Well, it is the reality. If you are rich enough you can have a private investment manager, otherwise you just have to pay for the knowledge and effort price. The good thing about it all is that you will be better for it. Your future self will never stop thanking your present self.


  1. Hello Michael,

    Thank you so much for sharing this article.

    I actually searched for your name online because I was looking out for a document you shared sometime ago about how you invest in foreign stocks.

    Then I found some amazing things that have happened in the course of time, you've been awarded Microsoft MVP for Excel and even started your own firm!

    I celebrate you so much bro.

    Keep soaring.

    MH Gideon

    PS: I've still not found the document, can you help with the site you use for that purpose?

    1. Thanks a lot! Glad you read through some of my new ramblings. I think the article on the foreign stock investment is http://www.olafusimichael.com/2016/07/how-i-buy-us-stocks-broker-i-use.html


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