How to survive economic hardship

Nigeria is not in a recession, but it is currently dealing with challenging economic issues. A high rate of inflation combined with the naira's decline has made it difficult for many Nigerians to make ends meet. Due to the insecurity in the nation's food belts, which has kept farmers from returning to their farms, food prices have skyrocketed. As a result, a large number of Nigerians are finding it difficult to manage the current hardship and afford necessities.

We'll be talking about a few methods to deal with and get past financial difficulties:

Emergency savings

It is impossible to overstate the significance of emergency savings in the uncertain world of today. Anybody can experience financial emergencies at any time, and in the absence of a safety net, these unplanned costs can quickly turn into a financial disaster. Building an emergency fund should therefore be your top priority and the cornerstone of your financial plan.

Making a budget is the first step towards setting up an emergency fund. Budgeting should be seen as a tool to help you understand your spending patterns and make wise financial decisions rather than as a limitation. Consider it more akin to a seatbelt than handcuffs.

To find the amount you can easily save each month, start by analysing your monthly income and expenses. Find ways to cut back on wasteful spending so you can add more money to your emergency fund. You can progressively increase your emergency fund by sticking to a budget and living within your means.

After you've created a budget, be proactive in setting up and keeping your emergency savings. Establish a savings goal that is in line with your long-term objectives and financial status. Try to save three to six months' worth of living expenses in order to be ready for unanticipated circumstances. For the purpose of avoiding temptation and guaranteeing that the money is kept untouched until needed, think about opening a separate savings account just for your emergency fund. You can create a financial safety net by gradually increasing your emergency fund over time by automating regular transfers from your savings.

As your circumstances change, review and modify your budget on a regular basis. Set aside time each month to monitor your spending, spot instances of overspending, and transfer money to your emergency fund as necessary.

Finally, make sure your emergency fund receives regular funding and think of it as a necessary expense just like your rent or utilities. Taking good care of your money will guarantee that you have a solid safety net in case of emergency.


Setting a budget

The key to financial freedom is budgeting. It is the best way to keep an eye on your income and expenses. You can monitor your resources and work towards more ambitious financial goals with the aid of personal budgets. Additionally, creating a budget gives you more chances to save cash, pay off debt, and lead a comfortable life. To maintain a living, one must be able to generate income. Additionally, the foundation of any budget is a fixed source of income.

What is my current income? is one of the crucial questions you should ask regarding your income and possible budgetary strategies. How do I spend my money? Can I save money on what I make now? How much of my earnings do I save and how much do I spend? Am I capable of earning more money than this?

Remember that your budget is flexible and should adjust to suit any changes in your situation once it has been established. For instance, money intended for a car purchase could be used to invest in more lucrative endeavours, like purchasing stock in international corporations.

Furthermore, unanticipated occurrences such as medical crises or opportunities for professional growth might require taking money out of savings. In the end, budgeting should be adaptable to unforeseen requirements, especially when addressing current situations that have long-term advantages.

After you've created your budget, it's time to implement cost-cutting strategies. This is a crucial first step towards improving your financial situation and directing more funds towards debt relief or savings. The following are some practical methods for cutting costs:

Give essentials top priority.

Make a distinction between necessities and wants. Prioritise meeting your basic needs before treating yourself to non-essential purchases. Making more thoughtful financial decisions may result from this mentality change.


Haggle over subscriptions and bills.

Reduce your energy consumption.

Adopt energy-saving habits such as utilising energy-efficient appliances, adjusting your thermostat, and shutting off lights when not in use. Over time, these small changes can significantly reduce utility costs.

Make dinners at home.

Eating out can be expensive. You can control the ingredients and portion sizes when you cook at home, in addition to saving money. To save time and money, try meal planning and batch cooking.

Avoid impulsive purchases

Consider whether an item satisfies a true need or just a desire before making a purchase. Establish a waiting period before making non-essential purchases to give yourself time to consider how they fit into your budget.

Conserve

Given their capacity to cover immediate needs and generate investment opportunities, savings have been referred to as a financial stabiliser. When savings exceed the rate of inflation, they gain greater value. Savings lose value due to inflation. For example, if the price of a tricycle increases to N330,000 in two months with a ten percent inflation rate, saving N300,000 to buy one today might not be feasible.

Consequently, it makes sense to increase the value of savings by making investments in assets that yield interest, such as bonds, stocks, shares, microlending, and manufacturing.

That is not to say that saving money is always simple. Spending is common among those with incomes, who do not include savings in their budgets.
Strict financial realities can also make saving challenging—and occasionally even impossible. However, it is not unfeasible. Small savings can be made by contributing to collections, cooperative programmes, or microfinance associations on a daily, weekly, or monthly basis. For example, in Nigeria, a point-of-sale company may allow a daily contribution of N500 over the course of 25 working days, resulting in an average monthly savings of N12,500.

With the introduction of the agent banking system by the Central Bank of Nigeria in 2013, the Point-of-Sale industry in Nigeria got underway. A POS service provider is used by POS agents to conduct business and handle transactions. Fintech companies, banks, and microfinance banks are providers of these services.

Bringing in more money
Many people struggle to make ends meet when the economy is in a recession. This is particularly valid for people who are facing wage reductions or job loss. You can investigate other revenue streams, though, to help you get by during these difficult times.

First of all, if you have a skill or talent that is in demand, freelancing is a great way to make extra money. If you are a writer, for instance, you can provide your services to companies or individuals who require content for their websites. In a similar vein, companies in need of logos or other design work can hire you if you are a graphic designer.

Second, it's now simpler than ever to sell goods online thanks to the growth of e-commerce. On websites like Etsy or eBay, you can sell anything from vintage clothing to handcrafted items.

Thirdly, leasing real estate can be an additional source of income. You might think about renting out a property or a spare room on websites like Airbnb if it's not being used. This has the potential to be a very profitable side gig.

Lastly, one excellent way to earn extra money is through teaching or tutoring. If you are an expert in a certain area, you might want to think about becoming a teacher or tutor. You can work with students of all ages and provide your services both in person and online.

Investing

Decisions are intensely personal and shaped by individual circumstances, especially in periods of economic expansion or contraction. In contrast to an elderly or sick person who depends on small savings for everyday needs, a younger, healthy person with a steady income and bright future may be more inclined to invest during a downturn.

The crucial element in this scenario is the disparity in time horizons: the younger person can tolerate changes in the market and eventually recover losses, whereas the older person cannot. These generalisations, however, might not hold true for all investors. For example, a younger investor may have family obligations and prioritise saving for their children's education, whereas an older investor may have substantial assets and want to accumulate wealth for future generations, which would change their time horizon.

Furthermore, regardless of their circumstances, some investors may feel more at ease making investments during volatile times because they inherently have a higher risk tolerance. Value investing, dollar-cost averaging, and diversification are a few ways to reduce risk that can be used when investing, whether or not a crisis is present.

The act of diversification

To balance risk, distribute your investments among a variety of stocks, bonds, and funds. Dive