A Money Africa report has said Nigerians need to get out of bad debt to survive financial challenges in 2023.

He noted that the residual effect of the pandemic, Russia’s war in Ukraine and high inflation had affected the finances of Nigerians, leading them to borrow in every possible way to survive.

In the report entitled ‘Optimism in 2023: Making the most of a potentially challenging year’, seen by the punch Recently, he said that in Nigeria, elections were going to be critical in determining how the year would turn out.

Still, the problem of slow growth, high inflation and high unemployment would persist, he said.

These problems could worsen with the phasing out of gasoline subsidies and a sustained depreciation of the currency unless oil exports recover strongly.

While advising Nigeria to avoid debt, he stated: “There are two kinds of debt: good debt and bad debt. You should put aside consumable bad debt (debt that has no future value) and gravitate toward good debt. A good debt pays off in the future.

“Be less aggressive with unconventional and high-risk investments. Less than five of your portfolio should be in high-risk assets. The argument here is that if the investment hits zero, your portfolio is still going strong.”

Advising Nigerians to focus on things within their control, he declared: “You cannot change the rate of inflation. You cannot stop the depreciation of Naira. They are out of your control, so you will do well to focus on what you can impact.”

According to the report, in an attempt to combat low tolerance for inflation, countries’ central banks raised interest rates. This had the biggest impact on personal finances since 2008/2009. Many economies slowed, raising fears about a recession that also led to job losses. Higher interest rates also led to a reduction in personal wealth, as the assets people invested in — bonds, real estate, stocks, and cryptocurrencies — lost a lot of value.

The report added that to mitigate emergencies, people need to invest in insurance.

It read: “We did a quick survey asking people what their emergencies were and realized they were mostly health emergencies, job loss, and auto accidents.

“You can mitigate health emergencies by getting a health insurance plan, so you don’t spend out of pocket. We understand how painful losing your job can be; therefore, we recommend aggressively improving and being visible on platforms like LinkedIn and others. For auto accidents, we recommend getting a comprehensive insurance plan (not a third-party plan), so that it covers everything.”

The report explained that money and the mind were critical conversations that people should be having constantly.

It said: “Your mindset about money has been formed since you were seven years old. So, you need to unlearn the things that don’t serve you and embrace the things that bring you joy. Do you have a fund for enjoyment? Are you writing down your big dreams that can lead to more opportunities? What steps are you taking to get it done?