Smoky Jollof Rice is better when cooked with fluffy Basmati Rice. For me, this is simply a fact. So, it was with some surprise that I found myself, last Sunday, enjoying my Jollof with simple Premium Parboiled. Why? For some reason, A 50Kg bag of Basmati Rice (at ~N70K) suddenly costs as much as my friend’s full-time salary as a customer service agent. Whether one is buying food items at a grocery store, booking a flight, or buying petrol at a filling station, the cost of everything seems to be sky-high.
Nigeria’s year-on-year inflation rate has increased from 11.02% in August 2019 to 18.12% in May 2021. Over the same period, my income has been essentially stagnant.
The effect of such high inflation is that it reduces one’s purchasing power and standard of living. What can one do to battle rising inflation? One can reduce expenses and seek ways to increase income faster than the rate of inflation. Today we will focus on the first part of the equation.
In this article, I will reveal 8 personal tips which should help you reduce your expenses. Let’s get to it.
The first step is to set budget line items for things inflation might affect, such as clothing, foodstuff, groceries, petrol, and housing. Allocate your money at the beginning of the month or week, and then stick to the spending limits you have set. You may also focus your cost-cutting efforts on the biggest discretionary spend areas. For me, those would be clothes shopping, travel/vacations, supporting family and online courses/subscriptions.
Reduce the rate at which you buy impulsively. Set a limit to the amount you spend daily or weekly. You may be in a store and want to buy something on impulse, a spending limit forces you to hit the brakes and reconsider the purchase.
Similarly, you can place a limit on your online shopping frequency. You stumble on a fashion page on Instagram, and you immediately have the urge to splurge on new dresses and bags. Actions such as removing your saved debit cards and placing a limit on daily/weekly transactions can go a long way towards helping you reduce excessive online shopping.
If you are planning to go on a vacation during summer or at the end of the year, be sure to start saving towards it now. Calculate the amount you will need and open an account solely for the purpose of your vacation. Also, make use of vacation packages by travel agencies to reduce costs.
At a point like this, you may want to create an expense fund to cater for family and friends. To ensure that the “black tax” (financial support given to extended families) does not affect your personal finances during this period, create an expense fund solely for the purpose of family and friends. You can dedicate 10% or 5% of your monthly income to the fund.
Resist the urge to pay for online courses when you can get a similar value at no cost. Online platforms like Udemy and Coursera offer free and subsidized costs for courses, ranging from Google’s project management course, Ycombinator’s startup school to Tuition-free business courses.
An emergency fund will save you from unexpected expenses or unpleasant financial surprises. Emergency savings will help a great deal in protecting you from a serious financial issue beyond immediate control. Your emergency fund should cover 6-12 months of expenses and should not be tampered with.
Once you have your financial plan outlined and churning along, it is important to review your plan frequently and make the necessary adjustments if your goals or the circumstances around your life change.
You do not have control over the economic situation, but you have control over your spending and budgeting habits. We would love to hear from you. How has the inflation surge affected your finances or money habits?