Inflation is significantly impacting the cost of living in Nigeria, with rising prices making it harder for individuals and families to meet their daily needs.
According to recent data, Nigeria’s real GDP grew by 2.98% in Q1 2024, but household consumption expenditure declined by 42.28% in the same period. The removal of fuel subsidies, currency devaluation, and increasing transportation costs have further strained household budgets.
To cope with these economic challenges, Nigerians must adopt strategic financial habits. Here are eight effective ways to reduce costs and stay ahead during inflation.
Prioritise your spending
With rising costs, it is crucial to differentiate between needs and wants. Focus on essentials such as food, housing, healthcare, and education while cutting back on non-essential expenses like frequent dining out, luxury items, and entertainment subscriptions.
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A practical approach is to buy in bulk from wholesale markets and seek discounts to reduce expenses. You can also substitute locally made goods for expensive imported items.
Create and stick to a budget
By tracking income and expenses, you can identify areas where you can cut costs. Digital budgeting apps, spreadsheets, or traditional pen-and-paper methods can help monitor spending and prevent unnecessary purchases. Regularly review and adjust your budget. This habit not only helps in managing debts but also promotes long-term financial stability.
Alternative source of energy
The removal of fuel subsidies has led to higher electricity costs, making alternative energy solutions essential for cost-cutting. You can reduce your energy expenses by investing in solar-powered gadgets and rechargeable lights. This will lower dependence on expensive generators and lessen dependence on costly electricity.
Explore urban farming
Growing vegetables, keeping poultry, or cultivating staple crops at home can help reduce grocery expenses. A small balcony or backyard garden can provide a steady source of fresh food, cutting dependence on expensive market purchases. Surplus produce can even be sold to neighbors or local markets, providing an additional source of revenue.
Utilise public transportation and carpooling
With rising fuel costs, owning and maintaining a private vehicle has become increasingly expensive. To save money, consider opting for public transportation services such as the Bus Rapid Transit (BRT) system or train services. Carpooling is another way to cut transportation costs.
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Furthermore, you can consider the option to switch from petrol to compressed natural gas (CNG), which is cheaper and more environmentally friendly.
Get multiple streams of income
The rise of digital platforms has created new opportunities in e-commerce, online tutoring, content creation, and remote jobs. Diversifying income sources can provide financial security and help individuals stay ahead despite economic challenges.
Negotiate and shop smart
Inflation drives up prices, but that doesn’t mean you have to pay the first price offered. Bargaining for lower prices when shopping for goods and services can help reduce daily expenses. Many markets in Nigeria allow for price negotiation, so taking the time to haggle can result in significant savings.
Another cost-saving strategy is to delay non-urgent purchases. If an item is not immediately needed, waiting for a price drop or a discount offer can help save money.
Invest wisely
Many Nigerians are turning to real estate investments, as property values tend to rise even during periods of inflation. Alternatively, investing in government bonds or savings accounts with high-interest returns can help your money grow while minimising risk.
Conclusion
While the government continues to work on stabilising the economy, you can take proactive steps to secure your financial well-being as an individual. Staying informed, being adaptable, and making strategic financial decisions are key to surviving and thriving during inflation.
