Diaspora Money Mistakes: Common Financial Traps to Avoid

For millions of Nigerians living abroad, sending money home or building a life in a new country involves navigating a minefield of financial risks. From unverified real estate investments to unsustainable remittances, many fall into avoidable traps that derail long-term goals.

Here are seven of the most common financial mistakes Nigerian diaspora members make and how to avoid them.

Blind Real Estate Investments in Nigeria

The Mistake: Trusting family members or unregistered agents to purchase or manage property on your behalf—without due diligence.

The Risk: Many diasporans have lost millions of naira to land scams, abandoned building projects, or double-sold plots.

The Fix:

• Work with verified property lawyers.

• Use digital platforms that offer transparency and documentation.

• Request video progress reports if building remotely.

  
  

Case in Point: In 2023, a Nigerian in Canada discovered that the house his brother was "building" in Ibadan existed only in WhatsApp pictures and not on any plot of land.

Living Above Your Means Abroad

The Mistake: Keeping up a lifestyle that mimics local celebrities or social media influencers often funded by credit.

The Risk: Debt accumulation, poor credit scores, and inability to save or invest.

The Fix:

• Create a realistic monthly budget.

• Use credit wisely and track spending.

• Consider group savings plans or ROSCAs for discipline.

Note: Nigerian banks may not factor in your foreign credit score if you return home so managing money well abroad is crucial.

Unending Remittances Without Boundaries

The Mistake: Feeling obligated to send money back home every month no matter your income, expenses, or financial goals.

The Risk: Financial burnout, savings depletion, and emotional manipulation.

The Fix:

• Set clear remittance limits with relatives.

• Prioritize sustainable support—like funding education or business setups.

• Learn to say “no” with love but firmness.

No Emergency Fund or Insurance

The Mistake: Relying on monthly income without backup especially in countries where healthcare and housing costs are high.

The Risk: One job loss or hospital visit can collapse your financial stability.

The Fix:

• Build a 3–6 month emergency fund.

• Consider health, travel, and life insurance abroad.

• Join Nigerian diaspora cooperatives that offer welfare support.

Scams Targeting Diaspora Sentiment

The Mistake: Falling for “once-in-a-lifetime” investments in Nigeria land banking schemes, forex trading, crypto mining farms often marketed with fake testimonials.

The Risk: Massive loss of funds, no legal recourse.

The Fix:

• Always ask for CAC registration, track record, and verifiable contacts.

• If it sounds too good to be true—it probably is.

• Consult diaspora finance groups before committing funds.

Neglecting Retirement Planning

The Mistake: Sending money home and taking care of others while ignoring your own future.

The Risk: Returning home in your 50s or 60s with no pension or long-term security.

The Fix:

• Use retirement plans in your host country (e.g. 401(k), RRSP, ISA).

• Invest in long-term assets property, mutual funds, stocks.

• Consider setting up a Naira pension account through PENCOM-approved diaspora schemes.

Ignoring Currency Risks

The Mistake: Tying all your investments or savings to Naira, while your income is in foreign currency.

The Risk: Currency devaluation in Nigeria can wipe out the real value of your investments.

The Fix:

• Diversify keep some savings in your host country’s currency.

• Use remittance platforms with favorable FX rates.

• Invest in forex-protected options (e.g. dollar mutual funds or euro bonds).

Being in the diaspora presents both opportunity and risk. The key is intentional financial literacy, informed decision-making, and clear boundaries. It’s not unpatriotic to say no, ask questions, or protect your future. In fact, it's the smartest way to truly support your loved ones—and yourself.