The journey to financial independence through financial literacy

Given the numerous articles, podcasts, books, webinars, and speeches given on financial literacy and financial independence, one would expect that by now the majority of us are aware of the existing link between the two concepts. However, I recently discovered that this might not be entirely true, and more awareness is still needed.

Financial independence goes beyond earning a salary that is sufficient to cover all monthly expenses. Being financially independent gives a sense of pride and peace. In simple terms, for one to be truly financially independent, you need to have savings, investments and accumulated wealth that sustains you when your salary is no longer available.

The journey to financial independence begins with financial literacy. The OECD/INFE 2023 international survey of adult financial literacy report defines financial literacy as a combination of financial awareness, knowledge, skills, attitudes, and behaviours necessary to make sound financial decisions and ultimately achieve individual financial well-being. The more aware you are of various financial instruments that yield returns, the closer you are to financial independence.

According to a CNBC Africa article titled ‘Why it’s time to ramp up financial literacy education across Africa’, less than a third of Sub-Saharan Africa’s population is financially literate when compared to OECD countries where over half the population is. I saw this evidently when I attended a career fair in Nigeria and realised that a good population of youths in attendance were not aware of financial instruments (e.g., mutual funds, bonds, and shares) offered by financial institutions. This clearly shows the need to improve financial literacy within Nigeria and the region at large, which in turn will contribute to making more youths financially independent.

The Nigerian economy of today is one where the state of entrepreneurship remains below average at 0.47 out of 1.0, according to the Fate Institute’s State of Entrepreneurship in Nigeria 2025 Report. Indicating that the business environment of today does not welcome or enable new entrants. As such, bridging the financial literacy gap is important to create awareness for youths about other opportunities to earn money.

Lowering the financial literacy gap benefits not just the people but financial institutions and the economy as well. According to the Central Bank of Nigeria, bridging the financial literacy gap within the country enables consumers to be better equipped to make optimal choices on the use of financial products, reinforces competitive pressure on financial institutions for better products and services and promotes financial system stability by increasing market demand.

Bridging the financial literacy gap is a collective effort and needs to spread across the board, from professionals to students and petty traders. To achieve this, more sensitisation programmes need to be organised by financial institutions as part of their CSR efforts in such a way that experienced professionals within these institutions go into markets, schools, and youth-based organisations with tailored communication scripts.

One notable improvement in the journey to financial independence across the region is that the saving culture within the Sub-Saharan Africa region has increased over the years. According to the World Bank, in Sub-Saharan Africa in 2024, 52 percent of adults saved in some way—a higher share than the developing economy average of 42 per cent. The World Bank write-up went on to state that adults went about saving in diverse ways, including using an account (i.e., “formal” saving) as well as using other methods such as saving at home or with a Rotating Savings and Credit Association (ROSCA). Additionally, mobile money savings played a significant role in the increase in savings amongst adults in Sub-Saharan Africa.

The concept of financial independence is paramount for youths, especially women who are in a patriarchal region like Sub-Saharan Africa. In many instances within this region, we see women, who trade a career for child rearing, find it difficult to achieve financial independence. This makes it difficult for them to feel fulfilled and achieve a reasonable financial status when compared to their counterpart who maintained a career.

To empower these women to achieve financial independence, it is essential to bridge the financial literacy gap. This can be done through tailored learning programmes, led by female subject matter experts who can provide practical experience on how to effectively plan, utilise, and invest income, as well as highlight the potential risks associated with different financial products. Additionally, financial institutions are encouraged to design and promote services and products that appeal to the needs of women across communities in different situations. This will create greater inclusion and help women on their journey to financial independence.

In summary, we need more advocates across our communities to promote the benefits of financial literacy and how it can help more people achieve financial independence. One thing we should all strive to do in our lives is to build a culture of saving by being financially disciplined.

About author:

Zalum Z. Onyechi is an economist by education, holding a bachelor’s and master’s degree in economics.