ENT 102

Workshop on Financial Literacy, Team

Management and
Budgeting

Dr. Chris Ofonyelu

Department of Economics, AAUA
August 17, 2023
Annual income twenty pounds,
annual expenditure nineteen,
result happiness. Annual income
twenty pounds, annual
expenditure twenty pound ought
and six, result misery.

--- Charles Dickens

Try to save something while your salary is
small; it’s impossible to save after you
begin to earn more.

--Jack Benny
 Everyday is a bank account, and time is our
currency. No one is rich, no one is poor, we've
got 24 hours each.
---Christopher Rice
Wealth is the ability to fully experience life.
--Henry David Thoreau

What we want is a rich and active life, a life lived in full

(John 10:10), a prosperous life. Only entrepreneurs live
this kind of life.
You need a single person to earn salary and a
TEAM to make WEALTH. Entrepreneurship is
about forming this team of likeminded
persons to make wealth
Formal education will make you a living; self-
education will make you a fortune.

--Jim Rohn

 Financial literacy is part of the self education,

because it is not learned in the classrooms. It
is acquired over time while in practice
 What is financial Literacy?
• Why do one need to be financial literate?
• How do I go about being financially
literate?
• How do I assembly a winning team for
my business/idea
• What are my financial plans? Where I am
now and where am going…
These are my core engagements with you this
morning
 Preamble
Financial literacy is the knowledge about
 how money works
 how to manage, earn or conserve it from fraud

 It is the possession of knowledge and

understanding of financial matters.
• It is the ability to use knowledge and skills to
manage financial resources effectively for a
life time of sound financial well-being
• Financial literacy underlie most actions that
entrepreneurs make.
 It includes the ability to understand financial
choices, plan for the future, spend wisely, and
manage the challenges associated with life
events which will determine whether one will
be poor or rich in life.

 It is the knowledge that after worshiping God,

the next agenda on this earth is MONEY
MAKING

 MONEY is the GOD and ruler of this secular

world, and you must learn its RULEs to
have it
 Preamble cont’d
“ A lot of businesses fail, not because they
are not profitable, but out of poor
management” E.G. Haulage/transport
business
Running a successful business requires
some disciplines and skills which must be
learnt and followed.
A successful business must have a realistic
financial plan on how to spend and make
money
• Once an innovation is made, the next
entrepreneurial task is management of the
success.
• Inability to manage entrepreneurial
fountains/wealth is the reason why many
entrepreneurial ventures fail too early

• Team management is the ability of an

individual or an organization to administer and
coordinate a group of individuals to
successfully perform a task.
• It takes a person to earn salary but a team to
make wealth. Salary is easily exhaustible but not
wealth
• Financial literacy implies that there must have
been financial plan.
• A financial plan is a comprehensive evaluation of
an investor's current and future financial state by
using currently known variables to predict future
cash flows (income, asset values and withdrawal
plans)
• This often includes a budget which organizes an
individual's finances and sometimes includes a
series of steps or specific goals for spending and
• financial literacy is defined as the possession
of knowledge and skills by individuals to
manage financial resources effectively to
enhance their economic well-being
• It is only when the vast majority of the
Nigerian population is financially literate that
they can participate in the formal financial
system
 by becoming aware of and taking advantage of its
opportunities
get financially included
contribute to the financial and economic
development of Nigeria.
• As a key implementation priority of the
Financial Inclusion Strategy, the Central Bank
of Nigeria developed a Financial Literacy
Framework (FLF) in January, 2013.
• The document articulates a strategic direction
for a multi stakeholder approach to the
delivery of financial education programs
across various target groups of the population
in Nigeria.
 Preamble Cont’d
It is the set of skills and knowledge that allows
an individual to make informed and effective
decisions about financial resources
It also involves intimate knowledge of
financial concepts like compound interest,
financial planning, the mechanics of credits,
advantageous savings methods, interest rates,
time value of money, etc.
A key function of financial literacy in business
is to protect the wealth of the owner
(business)
 Introduction
In a cross country survey in 2005, it was
discovered that:
• 67% had the knowledge of financial literacy in
Australia, but only 28% in practice
• 4 out of every 10 do not save for retirement in
US
• In S/Arabia, 45% of youngsters do not save any
money at all, while only 20% save up to 10% of
their monthly income
• In US, since 2003, a full month of every year is
declared as a financial literacy month for the
 Introduction cont’d
In a study by NDIC (2012), it was discovered
that:
 47% of 18+ tracked their expenses
 39% of start-up reconciled their
books/accounts
 27% were quick to borrow as they run out of
money
 55% engaged in long-term financial plan
 A majority of individuals do not plan for the
future or fail to make effective decisions to
manage their finances.
• In a more recent report from the research
dept of the NDIC in assessing the knowledge of
Nigerians with respect to financial literacy, the
major findings include:
• Literacy was lowest among students and unemployed
• Literacy increased with income
• Literacy higher in male than female
• 83% of Nigerian will wish to participate in
financial literacy programme if given the
opportunity
• As a student, how much do you save of every
income you earn.
• Of every thousand naira you earn, what
percentage do you keep to work for you
• What is your mps? - marginal propensity
to save
• How often do you make poor decisions about
money?
• If you are immediately affected by the vagaries
of the economic swings, then you lack
financial literacy, in fact, you are not
financially secured. What a dangerous way to
live in the 21st century.
 “We buy things we don’t
need with money we don’t
have to impress people we
don’t like”
-Dave Ramsey-
 Introduction cont’d
• At present, 45 countries at different income
levels are well-advanced in the design or
implementation of a national strategy for
financial education
• A link observed a strong correlation between
FL inclusion and macroeconomic performance
- The leading in the FL/FI countries constitute
the G20 countries: Australia, Brazil, Japan, the
Netherlands, Singapore, South Africa, Spain,
the United Kingdom and the United States.
• The failure of one person in a family may be
the failure of a clan, kindred and/or
generation.
• The failure of Nigeria may be the beginning of
a new bondage for Africa
– Not as a consumer, but as a producer and
contributor to the continent’s economy
– The future of Ondo state depends on the
collective will power of all of use to reject the
equilibrium our parent handed over to us and set
a new one
– The same also is the destiny of Nigeria
 Why do we need financial literacy?
• Ensure economic stability
– income
– Investment
– Consumption
– Lifetime financial security
– respond effectively to ever-changing personal and
economic circumstances of the present world
– LR/SR income-consumption hypothesis
– Minimize volatility noise
 Benefits Of A Financially Literate Nigerian
Population
• Better equipped to make optimal choices in
the use of financial products;
• Pose lower credit and default risk;
• Constitute a market for sustainable financial
services & Products;
• Reinforce competitive pressure on FIs for
better products & services;
• Promote Financial System Stability by
Increasing market demand, and responsible
use of financial services.
 Financial Literacy in a start-up
For every business, the ability of the owner to
foreclose fraud/loss determines the LR life of
the existence
This foreclosure is possible through proper
accounting/recording keeping
• All business involves daily transactions
• It is important to enter all of the days business
transactions for fast and easy access to make
sound business decisions
• The recording of these transactions is guided
by a set of concepts
 Accounting concepts for a start up
• Accounting concept refers to the set of rules that should
be followed in preparation of all accounts and financial
statements. It includes
 Accruals/matching concept: revenue and expenses are
recorded when they occur and not when the cash is
received or paid out. Income should be properly
"matched" with the expenses of a given accounting period
 Consistency concept: once an accounting method has
been chosen, that method should be used unless there is
a sound reason to do otherwise. This will make
comparisons of financial performance from year to year
more meaningful. Where accounting policies are changed,
companies are required to disclose this fact and explain
the impact of any change
 Accounting concepts cont’d
 Going concern: the business entity for which
accounts are being prepared is in good
condition and will continue to be in business
in the foreseeable future
 Prudence/conservation concept: revenue
and profits are included in the balance sheet
only when they are realized
 Cost concept: Assets are shown at their
historical cost price, and this forms the basis
for assessing the future usage of the asset
Financial Literacy Vs Family Business Devt.
• What business is your family known for?
• Families in developed economies act as active
participants in the economy
– They try to build a particular business with which
they are known
• Family Business Succession
– Threats
– Way outs
– Case Studies
 Accounting Concepts cont’d
• Three main financial statements are
important:
I. Income Statement
II. Balance Sheet
III. Statement of Cash Flows
The money you receive from clients in exchange
for your goods and services you provide
(income) – from sales
The money you spend on inventory, supplies,
wages and other items required to keep your
business operating (expenses)
• Two profits accounts are important:
– Gross profit
– Net profit
 The gross profit total revenue (equivalent to total sales)
minus the cost of goods sold. Gross profit is the profit a
company makes after deducting the costs associated with
making and selling its products, or the costs associated
with providing its services.
 Gross profit = revenue - cost of goods sold
 The net profit represents the number of sales dollars
remaining after all operating expenses
 Statement of Cash Flows shows the daily movement pf
cash in/out of the accounts
Thank you