Recognizing the Red Flags in Your Finances
Nobody wakes up one day suddenly bad with money. It often starts subtly, then grows into something bigger. First, it is skipping savings. Then, it is borrowing tiny amounts to get by. Before you know it, it turns into problems. It is only when you stop and look back that you realize that they were red flags all along, waving in plain sight while you ignored them.
Telling yourself, “I will save next month.” One skipped month becomes two, then three, until saving feels like a choice instead of a necessity. At the time, it does not look dangerous. But what it is really saying is, “I will take care of my future later.” That there, is a red flag.
When saving does not happen, borrowing steps in. Another red flag is living on borrowed money, even when it is just small. A friend lending you transport fare or a quick loan to balance your month, it feels harmless, but when it becomes a routine, it means your expenses are already running ahead of your income. And debt, no matter how little, has a way of piling up.
Another is spending with the comfort of future income. You say yes to expenses, convinced that the next salary, the next allowance, or that money someone promised will cover it; and when it does not, you scramble. Many of us learned too late that planning on money that is not in your account yet is a dangerous habit dressed as optimism.
When future income is not enough, the savings jar becomes the next target. The habit of dipping into savings with the promise of replacing it “as soon as possible.” Sometimes it starts with a real emergency, but then it becomes an easy crutch for every unplanned expense. Before you know it, the savings you thought you had, only existed in the past.
One of the most dangerous red flags is spending more to impress. Saying yes to outings you cannot afford, buying things just so people will not look down on you, or trying to keep up with a lifestyle that you clearly cannot afford yet.
Another red flag is comfort in not knowing. Not tracking your expenses, not keeping an eye on where the money is really going. It feels harmless, but that neglect is exactly how people lose control of their finances.
By the time we start to notice the red flags, the damage already feels too big. But most of us do not recognize them in the moment. It is only in hindsight that we say, “I should have noticed.”
Here is the redeeming quality: learning late is still learning. The mistakes might have been expensive, but they came with lessons that guide us forward. The salary you blew, taught you about budgeting. The debt you struggled to repay, taught you about limits. The emergencies you could not handle taught you that saving is not optional.
In the end, red flags are not just warnings we missed. They are the teachers that shaped how we handle money today. Even if we spotted them late, they still showed us the way forward.
NOW TO THE NEWS
Foreign Exchange Reserves Hit $41bn, Highest in 44 Months
Nigeria’s foreign exchange reserves rose to $41 billion, the highest level in 44 months, according to the Central Bank of Nigeria (CBN). This marks the strongest position since December 2021 and reflects a recovery from months of depletion due mainly to external debt repayments.
The reserves have grown steadily in August, increasing by $1.46 billion month-to-date, from $39.54 billion at the start of the month to $41 billion, representing 3.69 per cent growth in less than three weeks. On average, reserves grew by $81 million per day, indicating improved foreign exchange inflows relative to outflows.
Since July, reserves have surged by over $3 billion, an 8 per cent growth within a month, following a relatively subdued first half of 2025, when levels fluctuated between $37 billion and $39 billion due to oil price variations, debt obligations, and FX market interventions. Year-to-date, reserves have risen modestly by $124 million or 0.3 per cent from $40.88 billion at the end of 2024.
As a result, this increase strengthens the CBN’s ability to stabilize the naira, manage liquidity and defend against speculative pressures, while improving Nigeria’s sovereign credit outlook. At the same time, the growth reflects higher foreign exchange inflows, supported by increased capital inflows, oil production, rising non-oil exports, and reduced imports, reinforcing stability in the FX market.
Nigeria’s Debt-to-GDP May Reach 60% by 2027 – DMO
The Federal Government of Nigeria has projected that the country’s debt-to-GDP ratio could reach 60 per cent by 2027 under a new Medium-Term Debt Management Strategy (MTDS) for 2024–2027, approved by the Federal Executive Council. Developed with technical support from the World Bank and the International Monetary Fund, the strategy aims to balance government financing needs with debt sustainability while minimizing borrowing costs and risks.
The MTDS sets new fiscal and risk benchmarks, including raising the debt-to-GDP ceiling from 52.25 per cent in 2024 to 60 per cent by 2027, capping interest payments at 4.5 per cent of GDP, and limiting sovereign guarantees to five per cent of GDP. Other targets include shifting the domestic-to-external debt mix to 55:45, ensuring that no more than 15 per cent of total debt matures within a year, maintaining an average time to maturity of at least 10 years, and deepening the domestic securities market through the introduction of new products.
The framework follows the rebasing of Nigeria’s GDP, which expanded coverage to sectors such as the digital economy, fintech, creative industries, and the informal sector, boosting nominal GDP to N379.17 trillion for Q1 2025 and reducing the debt-to-GDP ratio to 39.4 per cent.
However, analysts have cautioned that while the rebasing improved statistical indicators, it does not reduce the government’s actual debt obligations or the rising cost of servicing them, as total debt rose by 22.8 per cent year-on-year between March 2024 and March 2025.
Non-Bank Corporates Surpass FPIs, Boosting FX Inflows by 24%
Non-bank corporates in Nigeria have outpaced foreign portfolio investors (FPIs) for two consecutive weeks, signaling improved investor confidence and a 24% increase in foreign exchange inflows into the country for July 2025.
Overall, FPIs still accounted for about 45% of all inflows in July, with offshore investments rising to $1.7 billion from $1.5 billion in June, supported by favorable carry trade conditions and stable global macroeconomic factors. This increase reflects a cautious but growing enthusiasm among foreign investors.
Meanwhile, the naira remained within the N1,550/$ band while strengthening against global currencies. At the same time, Nigeria’s foreign exchange reserves reached $41.046 billion on August 20, marking the highest level since December 2021, after a steady decline that had seen reserves drop to nearly $31 billion last year.
The rise in investor confidence is further supported by the Central Bank of Nigeria’s (CBN) foreign exchange reforms. By clearing over $7 billion of verified forex backlog, introducing the Nigerian FX Code, and beginning steps to unify exchange rates, the CBN has aimed to stabilize the market. CBN Governor Olayemi Cardoso confirmed at the latest Monetary Policy Committee meeting that these measures are starting to positively impact reserves and overall market stability.
Market Capitalization Drops to N88.8tn Amid Sustained Equities Sell-Offs
The Nigerian equities market closed on a negative note on Wednesday, as sustained sell-offs wiped off significant investor wealth. Consequently, market capitalization fell to N88.8 trillion from N89.6 trillion, while the All-Share Index dropped by 1,233.87 points, or 0.87 per cent, to 140,332.44 points, extending the week-to-date loss to 3.42 per cent despite gains over the past month and strong year-to-date performance.
Meanwhile, trading activity slowed, with a total of 573.68 million shares valued at N12.86 billion exchanged in 25,855 deals, representing a 21 per cent decline in volume and a 10 per cent drop in the number of deals compared to the previous session. Market breadth remained negative, with 45 equities declining against 17 gainers, although a few stocks posted notable increases.
In terms of sectors, performance was mixed. The Banking Index gained 0.47 per cent despite a 3.73 per cent weekly loss and a 41.5 per cent year-to-date return, while the Consumer Goods Index slipped 0.04 per cent, the Oil & Gas Index lost 0.06 per cent, the Pension Index fell 0.23 per cent, and the Premium Index declined 0.71 per cent.
