Income and expenditures are the foundation of
any viable business or economy, as the economy of the nation is a direct
replica of the economies of its citizens. The
concept of expenditure and income in Nigeria has to be clearly understood. We
all know that in a developing country like ours, there is need for a concrete
study of how Nigerians expend vis a vis their level of income in relation to
their poverty level seeing that a vast majority of Nigerians live below the
poverty line of less than one dollar per day (Okonkwo 2007). Aside knowing
this, there is also need to understand the pattern of spending of the general
Nigeria populace especially as regards their saving habit. The definition of income and
expenditures encompasses different areas and types of transactions, as
different professional disciplines see them in ways relevant to their specific
situations. Understanding the different types, especially expenditures, enables
companies, economies or families to record financial data more accurately with a
view to reducing the poverty level in Nigeria.
Income has different definitions depending upon
the specified area of business. General income is cash or an equivalent that
results from wages or salaries, rent from land or a building or interest, dividends
or profit from an investment (Mohammed 2005). Economists and statisticians view
revenue as the maximum amount of money a person spends during any given period
without becoming worse off. In economic terms, income is the real driver of the
economy, whether at the family or national level, since buyers' demand for
goods and services can only exist if buyers have income to spend.
Expenditure is cash or a cash equivalent paid in
exchange for goods and services. An expense may also be a charge against available
revenue, as in the case of an invoice awaiting payment. Revenue expenditure
pays for goods and services that the family uses within a short time frame,
such as one year or less. If a family or nation makes expenditure for fixed
assets like machinery or large equipment that lasts for longer than one year,
this qualifies as a capital expenditure. Businesses, families, nations etc
attempt to keep costs as low as possible without sacrificing revenue. This
comes with accurate recording and controlling of income and expenditures.
1.1 STATEMENT OF GENERAL PROBLEM
Generally in Nigeria, expending without recourse to income has
been a major problem. This problem has done more harm than good to our economy
at large seeing that when expenditures are made without consideration to the
income or amount earned it helps to increase the poverty level in Nigeria.
Nigeria, being a developing country has had its fair share of
criticism of being a country with a very high level of poverty with almost half
of its citizens living on less than a US dollar per day. It is being said that
Nigerians spend extravagantly, if this claim is anything to go by then the
reason of our dwindling economy isn’t farfetched.
AIMS AND OBJECTIVES OF THE STUDY
study is aimed at looking at possible areas Nigerians can be educated to
increase their level of savings.
The following are the cardinal aims and objectives of this
educate Nigerians on the relationship of their expenditures to income with a
view to enhancing their saving habit.
solutions of improving Nigeria’s economy at large.
major causes of excessive expenditures of Nigerians.
the effect of income earned to expenditure.
SIGNIFICANCE OF THE STUDY
The importance of this study is mainly to identify major causes
of excessive expenditures of Nigerians. Another cardinal significance of this
study is to know if there is any statistical significant relationship between
expenditures and income in relation to poverty level. Another major
significance of this study is to determine if there is a relationship between
the economy of Nigeria to how Nigerians spend in relation to their income
From the various studies as well as discussion
mentioned earlier, it is apparent that there is enough reason to warrant a
study that will examine these factors. So that we can recommend solutions on
how the economy can be improved upon, on how Nigerians can save more and
finally know the reasons for excessive spending in Nigeria.
1.4 SCOPE AND LIMITATIONS OF THE STUDY
Just like the topic of the study states, the scope
is to know the relationship between expenditures and income of Nigerians in
relation to their poverty levels. Another scope of this study is to determine
the income Nigerians earn to their expenditure.
The research covers in a comprehensive position the ways and what Nigerians
majorly spend on in relation to their income.
is necessary to mention some of the limitation of this research work. The principal
limitation is the difficulty in obtaining relevant information. The school
library has related books on the subject of the study.
There was problem in the data obtained, since the
researcher has to go round in retrieving these questionnaires from respondents.
Subsequent to this problem is the combination of academic work with the study.
There were also little cases of missing data in these questionnaires.
Notwithstanding, in the highlighted limitation
above, it is hoped that this research will be useful to Nigerians who would
want to enhance their saving habit and also to those who would want to know the
relationship between expenditures and income to poverty level.
1.5 DEFINITION OF TERMS
Expenditure: the act of spending or using money.
money spent on something.
money that a person, a region, a country etc. earns from work from investing
money, time, business etc.
1.6. RESEARCH HYPOTHESES
The research hypotheses are as follows:
there is no
significant relationship between income and expenditure.
H1: there is significant relationship between income and
Level of significance: 0.05
Decision rule: reject H0 if p-value is less than the level of
significance. Accept H0 if otherwise.
H0 : there is no significant relationship between income and
expenditure on poverty level.
H1 : there is significant relationship
between income and expenditure on poverty level.
Level of significance (α): 0.05
Decision rule: reject H0 if the p-value is less than the level
of significance (α) accept H0 if otherwise.