How To Save Your Finances During Inflation
Written by Blessing Onyegbula
The rising cost of things is one sure way to ignite a conversation amongst the average Nigerian. Financial experts understand that it’s due to an all-time high inflation rate in the country. The National Bureau of Statistics pegs it at 16.8% as of April 2022. However, the average Nigerian does not understand these figures. What they care about is its impact on their finances and lifestyle.
With this realization comes the question: How can I adjust my finances to match the market’s current demands?
Stick till the end as I dish out six tested tips that can help keep your finances strong in these challenging times.
Six Ways To Keep Your Finances Afloat In the Inflation
The basic financial education I received in high school taught me that one should analyze one’s finances based on spending, budgeting, saving, and investing habits.
Today as a young adult, this advice still stands true. That is why I’ve broken down the tips into these three standpoints.
Let’s begin with savings and budgeting.
Here’s a scenario you’re familiar with these days…
You go to the market to get a product for X naira, and when you come back another time for that product, you’ll find out you can’t get it at the previous price, the most you can do is curse at the universe, right? At least that’s what I do, but that hardly offers relief.
However, since one of our major financial strengths as women is our budgeting skills, utilizing it is an excellent place to start.
You should also try any of the following:
Tip 1: Prioritize bulk purchases for necessities
Take stock of the things you use at home. Things like food and groceries, recurring expenses that keep the home running (gas, fuel), and essential hygiene products(toiletries, skincare) are necessary. So, dedicate extra funds to this area and stock up enough that will last you at least two weeks. You should also rethink buying or splurging on things that don’t fit into this bracket.
While healthy living can be expensive, you can make the most of this period by starting an inexpensive fit-fam journey. Intermittent fasting or reducing packaged food or carbonated drinks is one way to achieve this.
Tip 2: Avoid luxury purchases for now
New phone, wigs, perfumes. Do you need all that? The answer is probably NO. However, if you must maintain your baby girl life and still spend on luxuries like this, you can share the cost amongst your friends or use discounts/sales offers to get them. You can use the time you cut back from outings and extravagant spending to catch up on your favourite Netflix series, We are not against living a luxury life amid a financial crisis. Just ensure you’re innovative while at it.
PS: For a dedicated piece on how to approach budgeting, check out this piece by one of our contributors.
The advice has always been to save for rainy days, right? Now that the rainy days are here, how do you navigate putting money aside, even though there’ll be an increasing need for it?
Here’s how you can better channel your savings plans this period:
Tip 3: Use your savings to build an emergency fund
This usually translates to saving short-term instead of long-term especially if you’re saving in a bank. You’ll find out why in the next point. But by doing it this way, you‘ll know that you have something to fall back on or dip into when the harsh realities of the economy hit you. Saving long terms or in banks in a period where there’s a low-interest rate will leave you feeling frustrated with your savings.
This brings us to the next point.
Tip 4: Use trusted FinTech companies instead of commercial banks for saving
There is never a better time to resurrect your Piggyvest or Cowrywise accounts than now. Such neo banks offer juicy interest rates on your savings. A better alternative is to keep your money in the bank with lower interest rates.
Tip 5: Save in other currencies
Another alternative will be to convert your money to a foreign currency with higher purchasing power. This way, you’ll be safe-guarding your money from falling with the naira.
Let me paint a hypothetical situation for you on this.
Say you have ₦50,000; you convert it to dollars and save. That gives you almost $100. Within a month, ₦50000 loses significant value and is worth 45k. But when you convert what you converted to dollars back to naira, it will now be worth almost ₦55000.
Some people have domiciliary accounts for this. You can also save in stable coins for those who are crypto-enthusiasts (though not advisable now as they are not so stable these days) or use Piggyvest’s flex dollar feature.
Tip 6: Keep investing
Even though investment is a long-term game and a game of numbers, keep at it this period. ₦10,000 invested over time will have more value than ₦10,000 lying in your account.
It may seem wiser to spend money now since you’re more concerned about tackling your current recurring expenses but don’t. However, with investment, your money is being put to good use, not stagnant in your bank and affected by the government’s low-interest rate.
PS: If you’re into cryptocurrency, we don’t advise you to go hard on it during this period. Instead, look for more tangible outlets to invest in, like buying stocks and bonds, real estate, etc. You can get started with little money using platforms like Rise, Bamboo, Chaka, etc.
I promised six tips in this post, but hear me out on this.
The best way to protect yourself during this period will be to increase your spending power. And this will happen by boosting your income with higher pay or a lucrative side hustle.
For now, wishing you good luck and strength to weather through this period of financial distress.
Edited by Zulu Nneka Anyaogu
Zulu is a Lawyer, Programs manager, and Youth Human Rights Advocate who is passionate about women’s rights and the inclusion of young people in decision-making spaces. In her spare time, you’d catch her binging on movies, reading crime and mystery novels, and eating. Connect with Zulu on Instagram, Twitter, and LinkedIn.
Published by Yetunde Onafuye
Yetunde is a storyteller, podcaster, and a graduate student with interest in the social and political history of post-independence Africa. She’s also the co-lead editor at Sisterly HQ. In her free time, she reads and reviews books, engages in social volunteering, and watches tons of dramas and TV shows. Connect with Yetunde on LinkedIn and Instagram.