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Money Matters with Nimi: Is Inflation Eating Away at Your Finances? 11 Ways to Soften the Blow

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Foto.com - More Downloads-6How are you coping with the recent hike in the price of fuel? The best time to think about how to protect your savings from the ravages of inflation is long before it actually strikes. Here are some practical ways to soften the impact on your daily financial life.

Create a Budget
By creating a budget and sticking strictly to it, you can identify exactly where your money is going. Review and track your routine expenses so you can begin to rein them in. For example; do you have to order a takeaway lunch every single day? It takes no time to prepare a packed lunch and will save you thousands of naira each month. Monitor your utility bills and be more cost conscious of electricity, diesel, water and mobile phone bills.

Reduce your Debt
Pay off or at least reduce your most expensive debt as soon as you can.  Credit card debt, in particular, is vulnerable to increased interest rates and that would put more and more pressure on the family’s already stretched income, which is unlikely to increase for now.

Don’t hold too much cash
If you are earning 4% interest on your savings, and the inflation rate is well over 10%, then you are in reality losing money and not earning anything at all. However, we all need some cash particularly for unexpected events, so certainly do maintain your emergency fund during periods of uncertainty; but remember your money is literally worth more today than it will be tomorrow.

Stock up on staples
The price of food is one of the first things to be affected by inflation. Stock up on household staples such as Garri, rice and other non-perishables to provide a cushion for a few months whilst you adjust to the new prices. It is easy to over buy or panic buy; If you buy in bulk which is usually cheaper, share the produce and split the cost with friends and relatives, or it will end up being a waste.

Buy what you need
Do you need to buy a cooker, a generator, inverter, or new tyres for your car? Sitting on cash will cost you in the long run. If there are durable items that you need and you have the funds, it is probably best to buy them now as prices tend upwards.

Reduce transportation costs
With the drastic increase in the price of petrol, we all need to find ways to reduce our transportation costs. Do we all need to be on the road at the same time? Do you have colleagues or friends who live and work near you? Car-pooling makes good sense as fuel costs are split. You will reduce your costs as well as the stress of driving each day.

How many cars do you have? How many cars do you need? If you are struggling with your fuel-guzzling jeep, perhaps it is time to buy a more fuel-efficient car for your daily use. Be strategic and purposeful in deciding whether to keep, sell, or purchase.

Invest in the stock market
The stock market is a good option if you have funds that you can afford to put away for the long term. Indeed, inflation is a key reason why equities are better for long-term investments. Cash and bonds may sometimes seem likely to yield a higher income at less risk, but there is evidence to show that stocks have outperformed other asset classes over the long term and are a good hedge against inflation. The cheap, easy way to own stocks is through an equity mutual fund.

Invest in property
Over long periods, property prices tend to outpace inflation. Property prices have softened so take advantage of this if you can   by buying. It doesn’t need to be expensive property. A plot of land held for Real estate requires a capital outlay so has to be planned for. If you have cash to spare, now may well be a good time to invest. As with all investing, seek professional advice and ensure that you have all the essential documentation in place.

Shop smart
It is time to shop smart and to get value for money. You don’t always have to buy everything brand new. There are very good resale online stores that offer nearly everything you will ever need including used vehicles, tools, household appliances and furniture in perfect condition. Don’t feel that you always have to “keep up;” be practical and get what you need at affordable prices. There is nothing wrong with buying second hand if it is in good working order. You can also place appliances and furniture that you don’t need, in the market place. Apart from getting rid of much clutter, you will also make some money.

Diversify
We’ve all heard the phrase, “Don’t put all your eggs in one basket!” This old maxim perfectly describes the concept of asset allocation. If you put all your savings in one type of investment and the investment fails, you could jeopardize your savings. Asset allocation refers to how you spread your money among a number of different asset classes such as cash, bonds, stocks and real estate. With the naira under so much pressure it is a good idea to hold some foreign currency in your portfolio.

Stay healthy
Stay healthy by exercising regularly and eating a healthy balanced diet. We’ve all heard this before but it matters now more than ever. You don’t want poor health and expensive medical care to add to any financial woes; certainly not now.

In the final analysis, it is important to stay positive. Inflation is one of the most common financial facts of life. The short term may be somewhat challenging but such times are full of opportunities. Seize them.

Photo Credit: Foto.com.ng

Nimi Akinkugbe has extensive experience in private wealth management. She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance. You can reach Nimi via the following: Email; [email protected] | Website: www.moneymatterswithnimi.com | Twitter: @MMWITHNIMI | Instagram: @MMWITHNIMI | Facebook: MoneyMatterswithNimi

10 Comments

  1. confused me

    May 23, 2016 at 6:31 pm

    Me I have a question o…what do you do with colleagues who have abandoned their cars (not faulty) to be riding with you and not even offering to drop money for fuel. I wouldn’t do that, i’d rather suggest car pooling, it’s selfish joor!.

    • Koi koi

      May 23, 2016 at 8:07 pm

      So u wud rada take bus dan ride ur car wit dem? If dey r nt dere won’t u drive 2 work b4?

    • Laila

      May 24, 2016 at 9:12 am

      Park your car for one week. After that the subject of pooling will be easier to bring up, that is if they dont bring it up themselves.

    • chichi

      May 24, 2016 at 10:16 am

      I cant believe you have to ask. So in these current times you are scared to bring up that they should contribute? You even said they have their own cars. If you have all agreed that you will be taken turns to do this then great! Car pooling is a great idea but if not then you have to speak up. People don’t always intend on taking advantage but as you say nothing then they will, as far as they are concerned you have no problems that’s why you’re not abandoning your car or asking for fuel money. Dont cheat yourself by turning into their taxi person rather than being an equal who is being helpful, but for how long? Stopping at the filling station with them is a great idea, this gesture will tell you who has any intentions of being reasonable and who is just using you. After all they have their own cars.

      These ideas are great! Hope they are useful to people.

  2. babygiwa

    May 23, 2016 at 7:01 pm

    Bring it up with them! Discuss it, tell them they need to contribute money for fuel or stop taking your car. Do that for a week, if they ask you why you stopped, tell them fuel is expensive. Simple.

  3. bee

    May 23, 2016 at 7:03 pm

    @confused me: its simple. when they enter the car, simply tell them they all have to start dropping fuel money else you cant continue the charity work.

  4. luvnaija

    May 23, 2016 at 9:09 pm

    They should contribute for fuel also not forgetting the wear and tear on your vehicle. We so used entitlement mentality in this country! What if you parked your car wouldn’t they go to work?
    It’s being reasonable not fist tight they should pay fuel money or you agree on pooling arrangement.

  5. Spunky

    May 23, 2016 at 9:53 pm

    You can hitch a ride with me once or twice. Consistently? Mba nu! As I dey drive enter filling station, dey dip hand inside pocket or use public transport. I’m not Santa bro.

  6. Blondie

    May 24, 2016 at 1:38 am

    Every other point is good to go EXCEPT “invest in the stock market”… the Nigeria stock market is a no-go area dz days.

  7. AANUOLUWAPO OYEDELE

    May 24, 2016 at 11:00 am

    BN, how do i submit my articles plz

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