How to cope with economic downturn

A few days ago, reports indicated that Nigeria had lost its position as Africa’s biggest economy to South Africa. This was largely as a result of the rise in value of the South African rand as against the devaluation of the naira.

According to a report by the International Monetary Fund (IMF), Nigeria stood at a GDP of $296 billion by the end of 2015 as against South Africa’s $301 billion.

With the drop in oil prices, the poor performance of the naira in the foreign exchange market and rising inflation, it has become a herculean task for many households to maintain financial freedom and stability.

While the government struggles to get the economy back on its feet, here are a few pointers on how you can stay afloat in these austere times;

 

Have multiple streams of income – Gone are the days when you could rely on your monthly salary at a job to take care of all your financial needs for the month, have enough to save and spare some more for long-term projects. In a time when job security has become a mirage, it is extremely important to have extra sources of monthly income no matter how little. It could be rendering services which you are skilled at like sewing, tutoring, event organizing etc. Anything – service or product – can be monetized if given careful planning, production and marketing.

 

 Cut back on impulse purchases – Yes, the idea of a cashless society does not make this easy but it is very important now more than ever to not engage in impulse purchases as often as you normally would. If you find it hard to do, you can limit the number of ATM cards you move around with and also make a mental note of daily spending limits to serve as a self-check throughout your dealings for the day.

 

Make a habit of having a certain portion of your income saved monthly – It could be 20% or 25% of your monthly income. Make it a point of duty to have your decided percentage saved every month; preferably in a different account. This way, to buttress the point above, you can decide not to move around with the debit card for your savings account so that you can ensure you have your savings separate from your ‘daily operations’ account.

 

 Invest your money wisely – Find ways to invest your money wisely. It could be stocks (yes, people still make profit from stocks), mutual funds, real estate, equities etc. However, do make plenty of inquiries and research and have ample understanding of where you are investing and how to track your investments to ensure it yields profit for you.