How to manage your funds in times of economic slow down!
Common sense for tough times!
It doesn’t take an economist to figure out that the economic times are tough right about now. The average man on the Nigerian street can feel it.
- Civil servants have not been paid in many states for months
- the Naira has weakened drastically in the last few months- I have friends that have stopped their regular importing and retailing fashion business because cost prices are too high at the weaker exchange rate
- Transportation cost has gone up because of fuel scarcity/irregular price issue. This affects everything.
- Food and fast moving consumable prices have gone up noticeably in the last few months. The aboki in my area tried to sell one tuber of yam to me for N1,000. The children’s’ cereal cost a lot more, some services fees have increased- like TV viewership!, even distilled water is more expensive!
Inspite of all these, most people’s salaries have not gone up. This means your salary automatically cannot cover all it used to cover because the value of the naira is weaker. These are some ABCDEF tips that should help till things get better. Yes, they will! Hold on!
A= Attitude to cost: Say NO to unnecessary cost. This is a life-long tip anyway. Make a budget and stick to it. This is not the time to buy things you do NOT need. You may want to consider making a list of what you need before you walk into any store! You should hide your credit card to prevent excessive shopping. You need to live within your income. PERIOD.
B= Buy in bulk if you can afford to. In times like this, prices will mostly increase. If you can afford to, buy essential food times when prices are at their lowest. Stock up on staple foods, groceries that will be consumed and will not spoil easily. Examples: Rice, detergent, gas e.t.c
Also, buy groceries in large sizes. Mostly the larger sizes are cheaper on a per case/unit basis. The only watch out is that you need to ensure you dose rightly otherwise most will be wasted especially if you are not the only one that doses or portions it.
C= Corner your money in real estate. Yes, the value of homes and other properties you invest in may depreciate a little during a recession because there is reduced demand and cashflow BUT you can still generate some passive income on properties by turning them into rental properties.
D= Don’t take loans that cannot be serviced or invested wisely. Bank interest rates are increasing. Only take loans for assets, not liabilities (e.g personal cars, vacations) in these times. Also, only invest in businesses that can cover your interest rate. Otherwise, please don’t take it, it’s a loss!
E= Embrace other currencies too. Whilst this is not very good for the naira, the truth is the more naira you have the less valuable your money is. So if you have a legitimate opportunity to invest in other currencies or countries, it is to your advantage.
F= Fraudsters are coming soon! Mostly during or after a recession, there is an increase in the number of fraudsters that promise to double your money or give you crazy returns because they know you are broke and eager at this point to recover all you have lost during the recession. Be aware of this and avoid any business proposition that looks too good to be true. If it looks too good to be true, then it is not true!
In times like these, a new set of millionaires are born. They are the ones that learn to invest even in recession. They are the ones willing to take the risk and invest when all seems unwell. You can be one too. Stay calm, cut cost, maximize investment and pray for Nigeria. E go better!
So tell us which of these are you doing already? Which one will you start?
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