How Can I Invest If I Earn So Little?

How to Invest when you earn so little
How to Invest when you earn so little

This is a question we get a lot and we understand why.  We live in a country where the minimum wage is ₦30,000 monthly and even very few people earn that much. To put this in perspective 90 million Nigerians live below ₦137,000 annually. Yet, a constant message that we are all exposed to is the importance (or need) to invest. But seriously, how can one invest if they earn so little?

At Risevest, we are not only interested in your investment. We are interested in every aspect of your financial life. That said, here is how we are thinking about the question that has brought you here.

For a start, if you think you earn so little, your first challenge is that you have an income problem. And the thing about an income problem is that it cannot be solved with investing. You can only solve an income problem by earning more income. In effect, we are saying although you would like to save up some money and invest, it will be difficult to do it effectively with a little income.

The reason for that is not far-fetched. From the image below, we can deduce that what you invest and what you spend all come out from the income that you earn. To increase your investment then, you need to increase your income. Note that it is your income that you need to increase for you to increase your investment and not the other way round. That’s why we said earlier that you can’t solve your income problem with investing.

Investing despite earning so little

We know that investing is more of a habit than a mathematical calculation. So we would say while you work to increase your income, don’t stop investing the little that you have as well. Yes, from the ₦50,000 or ₦30,000 that you earn, setting aside ₦1,000 or more in your savings or investment account is still very much advised. That’s because you would have been training yourself emotionally and building an important habit towards efficient personal finance management.

How to earn more

I mentioned earlier that we are not just interested in your investment management alone but all your money concerns. In one of our previous Investment Club meetings, we had Uzezzi, a top-notch freelancer on the call. She shared ideas on how to earn extra dollars using your mobile phone. Listen to her advice here.

Beyond Uzezzi’s lesson though, there’s a general principle to earning more money. It’s a 3 step process that is true and works for whoever can apply them.

  • Add more skill to your skill stacks: You will only be paid for what you can do. So to earn more you should increase the threshold of what you can do. Gain more skills.
  • Let the world know that you have that skill – gaining skills isn’t enough. A lot of people now have skills. You must apply for the job, you must submit a proposal, you must submit the tender and apply for the grants. You can also share with your network what skills you have and what you can do. These are different ways of telling the world about your skill. 
  • Offer the skill as a service or package into a product and sell – the next stage is to use your skill to the benefit of others. In exchange for the benefit, charge them money. 

That’s it! That’s the simple equation that everyone has applied across space and time. Well, another obvious option is to get a better paying job. Because it might just be that it is your current job that is not paying you enough. Even at that, it would be good if you ensure that you have the right skill stack that will help you get a better paying job.

In summary, you can invest if you earn so little but what’s even more important is to focus on earning more first of all. To earn more, you have to invest in yourself. Develop in-demand skills and offer them to those who will pay for them. Another option is to get a better paying job if you can. Otherwise think outside the box and earn more. And when you earn more, you won’t be faced with the challenge of having little to invest again.