First thing’s first, what is Inflation? Inflation could loosely refer to the increase in the prices of goods and services over a given period. With this thought is the implication that the purchasing ability of the persons in that place declines in worth and value while the numbers on the currency note remain. For instance, a commodity, which was previously sold for N1000 could be sold for N1500 during an inflation period. While inflation can be calculated or recorded at different percentages, the key thing to note is that the value of the money at hand drops over time.
In all these, what should one do, especially when there are needs to be met, and limited sources of income? How can one easily live through an inflation period? We have curated the following steps to aid you through an inflation period;
- Evaluate your spending habits: As much as it depends on you, try to spend less on everything. A good place to start would be an objective evaluation of one’s overall spending habits. There could be unnecessary trips that need to be cancelled, and subscriptions that need cancellation, among others. Your spending should be prioritized.
- Adjust and Re-adjust your Budget: The first point calls for this second course of action – adjust and readjust your budget. This mainly affects recurrent expenditures like money spent on food, transportation, and utility bills, among others. This readjusted budget would aid an honest evaluation of what is needed vis-a-vis what is earned.
- Avoid Impulse buying: economists agree that when there is inflation, it is not the best period to make purchases by impulse or buying items that may not be needed. This is because, many times when we purchase things by impulse, we are simply moved by our emotions at the instance of time or because we think it’s a good deal, but in those things, we don’t stop to ask if we really need those items. It is always best to wait a day or two before making purchases outside your budget, to give you ample time to evaluate the necessity of the item.
- Buy you food items in Bulk: Ever heard of the phrase “Penny wise, pounds foolish”? Used especially to describe something that is done to save a small amount of money now but that will cost a large amount of money in the future. This is exactly what happens when we buy food in small quantity to satisfy the present need. It is advisable to buy in bulk to save more cost later on.
- Invest your money: Inflation periods are times to invest and avoid saving money. This is not a green light to hop on all investment invitations. You should seek investments that are real, and affordable and the return on investment (ROI) is fair enough. More important, choose investments that rise with inflation. Saving money will leave you with figures, not value. You may want to consider investing in a Money Market Fund.
- Invest in yourself: a course of action highly recommended is that you should find a way to invest in yourself. This includes taking up upskill courses, professional training, refreshers courses, internship, and fellowships. Beyond aiding your self-development goals, this increases your value and what you can offer, equally increasing what comes in as income.
- Have multiple sources of income: During inflation times, one must increase their passive and active sources of income. Upskilling, among others, would aid one to have multiple sources of income as well as have the ability and information needed to explore new sources of income.
- Evaluate your decisions: Do not take any drastic and uninformed decisions during this period. Whether it is an investment decision, meals decision, saving plans, etc. it is important that you confer with relevant quarters before taking a decision.
If you want to know more about AXA’s investments plans, please visit AXA Mansard website at www.axamansard.com to get started.