It is no longer news that Nigeria and other leading global economies are experiencing a surge in inflation. This is further compounded by the lingering socio-economic dent the COVID-19 pandemic left on its trails.
The Russia-Ukraine war has prompted a perfect storm that is rippling into a spiralling global energy crisis. But it is inflation that leads the pack of economic villains that is threatening household earnings and expenditures.
In the United Kingdom, the latest figures from the Office for National Statistics (ONS), show an inflation rate that has risen to a whopping 40-year high at 10.1%, the feared doubled-digit zone! The country has recorded an increase in the Consumer Prices Index (CPI) which rose higher than the 9.8% economists had forecasted.
The United States has not been left out of the global gloom, as its inflation rate reached 8.5% in July 2022, a figure worsened by the surging energy prices, thereby making the inflation rate alarmingly close to a four-decade high. Consequently, consumers have seen prices rise sharply on various goods and services as strong demand collides with persistent supply shortages, especially gas, food and the cost of travel. The CPI growth surge in the U.S. increased to 9.1% in July 2022, resulting in the upsurge of the overall food index to 10.9%, the biggest jump since May 1979.
The underdeveloped and developing economies of the world have perhaps been dealt the cruellest blow by this global phenomenon, with Nigeria experiencing an unprecedented increase in its inflation levels. The inflation rate in Nigeria increased to 19.64% in July of 2022 from 18.6% in June, the highest jump since September 2005. As if that is not enough, food inflation has reached 22%. This economic despair, underpinned by the consistently weakening Naira, has coalesced to make the economic life of the average Nigerian a tale of doom and gloom.
The problem with inflation is that when prices go up, the cost of living also multiplies, but income levels do not. If anything, people are forced to spend less than usual as pressure increases on their strained incomes. Corporate organisations also follow the trajectory of consumer behaviour to curtail spending, impacting the services sector of the economy.
Although understanding and tackling the intricacies of this economic reality is currently a matter of global concern, the adverse effects of inflation on our personal lives are still far-reaching. So, what steps can individuals and families take to be resilient in these trying times? This edition seeks to highlight a few of them.
1. This is the Time to Sincerely Have a Budget
The emphasis on this advice is the word ‘sincerely’. The reason for this is simple; having a budget is one thing, but following through with its content, is another matter altogether.
However, if you can create a budget that details your most essential expenses in order of their priority and abide by it as sincerely as possible, you definitely will be doing yourself a world of good, especially considering our current economic realities.
If you are an impulsive buyer, having a budget is non-negotiable because you are more likely to make unnecessary expenditures than the average person. Unfortunately, today’s economic times are very unforgiving of such expenditure errors.
So, from now on, be more deliberate about your spending habits by creating a budget and abiding by it sincerely because spending lesser than usual is a fail-proof method of resilience during hyperinflations like ours.
Learn more on how to budget and save money each month.
2. Save More!
Although the rising prices of goods and services have resulted in a higher-than-usual increment in cost-of-living, paying close attention to your savings is imperative. While this will be extremely difficult because an equal addition to your income has not accompanied the increase in living costs, thereby putting more pressure on the ‘little’ you earn, saving during inflation ensures you have financial cushioning to support you in an emergency.
Interestingly, having a healthy saving habit will also help ensure that you make smarter spending decisions, and you are more likely to abide by your budget when you save. So, even though your rent, gas prices, food, and other household expenditures are gnawing at your limited income, try to save as much as you can, and who knows, if the ever-rising prices of commodities begin to drop in the future, you will be getting better value for your money than you would have without any prior savings.
Learn more on how to start and build an emergency fund.
3. Make Wise Investment Choices
Investments are very effective measures of preserving and increasing the value of your money during inflations. So, more than ever before, depending on your preferences and income level, this is the time to research viable investment options that work for you. It is important to understand that inflations may also affect investments’ returns but do not be deterred by the lower-than-usual return-on-investments value. So, investing is always a good idea, be it real estate, stock options, or digital assets.
Importantly, you should bear in mind that when investing during inflations, there is a higher risk of falling victim to fraudulent schemes in the guise of legitimate investment opportunities offering tempting yields. Taking special precautions to ensure your money is safe before making any commitments is critical.
4. Protect Your Wealth
This is the time to pay careful attention to protecting your money, life, and properties because you cannot afford to incur any losses, especially now that there is pressure on your earnings. The reality of living is that, in one way or the other, you are susceptible to numerous risks which can result in substantial financial losses. Your car could get stolen or damaged, your house and other properties could also experience a burglary incident, and a personal accident may warrant you needing emergency medical treatment.
All these realistic possibilities could occur at any time, and they all have financial implications which could be daunting to fulfil in the current economic realities. Therefore, loss management and risk mitigation tools like insurance protect you from unanticipated costs incurred on property losses or damages. So, protect yourself and your wealth by embracing insurance.
Interestingly, there is a rather peculiar relationship between inflation and insurance. Speaking of wealth protection through insurance, we dare say no better insurer guarantees timely claims payment in the unfortunate eventuality of a property loss or damage than Leadway Assurance Company Limited, the largest insurance organisation by asset base in Nigeria.
Leadway offers a comprehensive array of financial services in savings, investments, asset management and wealth protection. If you require more information on their services, please visit www.leadway.com or scan the Q.R. Code at the top right or call the Leadway Assurance Financial Management Experts on 01-2800-700 or email [email protected] for professional advice. You call also request a call-back by visiting www.leadway.com/call-me.
We are also within your reach on WhatsApp via our virtual assistant support on 08129997044 or any of our social media outlets – @leadwayassurance on Facebook, Instagram, and Twitter. You can also send a D.M., and we will revert with all the information you require.