On a daily basis, an average Nigerian spends on food, transportation, airtime or data. These expenses add up to monthly and yearly expenses that, left untracked, your buying power.
As of May, Nigeria’s inflation rate hi t 17.71 percent, with many of these essential expenditures rising – the rate of food inflation rose to 19.50 percent. Financial Derivatives Company, however, in its July LBS breakfast session said inflation will rise to 45.64 percent if the basket of goods used to measure it is updated to reflect changes in household consumption patterns, demography and the economic impact of covid-19.
Inflation hits everyone but everyone feels the effect of inflation in their own way. Individuals and households spending patterns are quite different as some consume more items than the other, for instance not everyone eats beef or poultry so this set of people do not experience the increasing cost of beef.
Where you reside matters as rents differ with location, housing costs more in highbrow areas like Lekki, Ikoyi, Maitama. People who commute from Ajah to Ikorodu will spend more on transport compared to those who work remotely.
Tuition fee differs across schools and age, so a bachelors budget is immune from a rise in school fees. But how can you calculate what all these means for you?
You start by calculating the amount spent on food, rent, education, transportation, clothes, and household expenses monthly. To do this you track all your expenses using your bank statement or a budget tracker if you have one and if you do not, any of the top expense trackers recommended by Google Play – Spending trackers, Kippa, Wallet, monefy and Spendee.
Read also: Rewane forecasts inflation above 40% on CPI basket reconstruction
To calculate your personal inflation rate you subtract your total expenditure in a month from that of the same month last year – that is, the expenses in July 2022 from that of the same month in 2021. The difference is divided by the total expenses made in 2022. So if in July 2022 you spent N100,000 and N80,000 in the same month in 2021, the N20,000 difference is divided by N100,000 which comes to 20 percent – that is your personal inflation rate.
Here are a few ways to manage your personal personal inflation rate if its alarming:
Modify your budget: With the change in prices of goods and services, the starting point is to change your budget allocation to adjust what goes to savings, wants and needs.
Check your bank statement for the last three months to track your spending habits and know things to cut off such as unused subscriptions. Also breakdown your budget into monthly and weekly budgets to closely monitor your spending.
Evaluate your income and expenditure: Having multiple streams of income is fast becoming a necessity; get a second job, start a business to increase your income. Requesting for a salary raise can also increase your earnings. Spend less on fueling generators by reducing the period of time it runs, and put fewer appliances on it.
Whatever the case is, balance it with spending below your means by sticking to your budget and also cutting off unnecessary expenses.
Automate your savings: Leave a standing order with your bank to deduct a fixed amount immediately your salary is paid. You can use fintech apps, or join cooperatives to build discipline and avoid spending all of your money.
Sell unused items: Items you do not need or use, such as home appliances, clothes, gadgets can be sold so you can make better use of the income from the selloffs.
Get the best deal for everything: Try to pay less and earn more. Renegotiate every deal your wages, things you buy, services you pay for, interest on loans, benefits. Participate in sales, Black Fridays.
Plan your meals: The prices of food keep increasing, save by buying in bulk and portioning it over a period of time. You can also swap unhealthy and pricey snacks for cheaper and healthier options. Eat-out less at fancy restaurants. Shop for your food items at big markets where you can get a bargain.
Take public transport: Private car owners can commute more with public transport to save the cost of buying petrol. For people with two cars they can use just one. Sharing car hailing services with commuters going to the same location and with friends and colleagues at work will reduce your transport expense. Have a transport budget, to properly monitor your transport expenses, and cut down on unnecessary trips.
Invest: Invest in your finance knowledge so your money can work for you. Learn more on how to multiply your income through investment and practise it.
