In the face of Nigeria’s present economic issues, such as the elimination of fuel subsidies and the resulting increase in the cost of living, it is critical to adopt a resilient mindset and arm ourselves with practical techniques to optimise our financial resources.
Since pay raises are unlikely to happen in the near future, everyone must take a resilient approach to seizing control of their financial situation.
In today’s article, we will delve into practical methods that can enable individuals to maximise their cash flow and survive in the face of economic adversity.
The influence of a positive mindset: Studies have demonstrated that having a positive mentality is inherently linked to better financial success. Individuals with an optimistic view, according to Stanford University research, are more likely to endure difficult circumstances and take proactive steps toward financial success. Conversations around now are likely to be about how the recently removed subsidy is biting hard. We can equip ourselves for improved financial well-being despite the current conditions by building resilience and optimism.
Assess and prioritise Expenses: There is no better time than now to do a practicable review of your need-to-have expenses and nice-to-have expenses. A new International Monetary Fund (IMF) report emphasises the significance of reevaluating and prioritising expenses during times of economic stress. You can focus on achieving your basic needs while eliminating unnecessary spending by distinguishing between essential and optional expenses. Furthermore, implementing cost-cutting initiatives like energy-efficient practices, carpooling, and bulk purchasing might result in significant long-term savings.
Read also: The Finance Act 2023: Changes to tax legislation and the FIRS’ stance
Create and stick to a budget: A couple of studies have shown that only about 40% of people have a budget in place. Do you have one and work with one? Creating and sticking to a budget, on the other hand, is critical for financial security. Individuals can find opportunities for improvement by analysing their income and expenses, allowing for improved resource allocation and higher savings for future needs.
Increase your income: Global changes, such as the rise of the gig and side-hustle economy and remote employment options, provide individuals with new ways to earn money. There are two ways to improve your financial situation: reduce your expenses or earn more. It’s more practical to increase your income in an economy that imposes additional expenses on you. It’s time to wear that creativity and resilience cap with regards to earning more money legitimately. According to McKinsey & Company research, the gig economy will account for 20–30% of the workforce in wealthy countries by 2025. By embracing these developing practices, individuals can diversify their revenue streams and increase their financial stability.
Develop financial literacy: You can improve their understanding of personal finance by actively seeking knowledge through educational resources, seminars, and trustworthy financial workshops. This will enable you to make informed judgments and implement efficient money management tactics.
Embrace frugal habits: Adopting thrifty habits is critical for mitigating the impact of rising costs. You can considerably lower your expenditures without sacrificing quality of life by utilizing tips such as conscious spending, bulk purchasing, and energy savings. These practices help to ensure long-term financial stability and resilience. Make it a habit to review and reassess your spending habits.
Create an emergency fund: Finance experts advocate for the creation of an emergency fund as an essential component of financial readiness, and its importance is highlighted in a season like this. Setting aside a portion of your salary in a readily accessible savings account provides you with a safety net from which you can manage unforeseen needs and weather financial storms with confidence.
It is critical to remember that we have a bit of control but not complete control over our financial well-being. We may maximise our cash flow and successfully traverse these challenging times by developing a resilient mentality and executing realistic measures. Until the economy gets better and things stabilise, continue to embrace resilience and set out on a path to a financially secure future. With the right financial habits, let us work together to create a society of empowered individuals who can thrive in the face of adversity.
In my next article, I will talk more about understanding your costs and cashflow.
