Oil prices have surged dramatically beyond $100/barrel, hitting multi-year highs as geo-political tensions between Russia and Ukraine escalate. While higher oil prices may be good for the Nigerian economy, they present a challenge given their inflationary impact as real returns remain in negative territory.
Given the current economic situation, we have curated a few tips you can arm yourself with as you financially prepare for the inflationary impact:
- Create a budget:No matter where you are in your financial journey, a budget is key to ensuring you’re set up for success. One of the easiest ways to create a budget is with the 50/30/20 rule, where you allocate 50% of your income to needs, 30% to wants and 20% to savings. This rule, if carefully followed helps keep you in check to ensure you do not misappropriate your funds.
- Cut out unnecessary expenses:Food deliveries, streaming, whatever it is, we all have things we spend on that we can do without. Cutting out unnecessary expenses will give you the flexibility to spend more on what truly matters and the financial resilience to prepare for tough times. Though it may seem tough, giving the ease and comfort these unnecessary expenses bring, but in the long run, you will realize that you have set yourself up for successful financial journey.
- Save/Invest:Rising oil prices may initially hurt your wallet, but they also offer opportunities to fatten it up. Once you cut out spending on unessential items, you should have some money left over. Put some of this into investment vehicles containing stocks that rise with oil prices so you have a cushion to fall back on.
Adapting to difficult situations will be hard, but with discipline on your side and these strategies in your toolbox, rising oil prices won’t knock you off the path to your financial dreams. And if you top up your savings fund now to brace yourself for the increase, there should be fewer shocks ahead.
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