How Nigerians Can Protect Their Money from Inflation

Inflation is a present-day fact in the Nigerian economy. Almost all households are feeling it at the market, in transport costs, or in the price of basic services. What was considered normal a year go is today’s abnormal, and what we thought was enough money then doesn’t seem to go as far as it did. Thus, what used to be a economic issue talked about by the experts is now a day-to-day preoccupation for millions of Nigerians.

At the base of the issue, inflation is that money’s value decreases over time. As prices go up steadily, each naira goes a shorter distance than it did before, that which in turn affects all of us, from those that are paid a salary to business owners, students, and retirees. We put our money in cash, and by the time we wake up, we find out that it has diminished in what it can do, which in turn does not meet the same needs it once did. To that end, we do well to understand this is the first step in making better financial choices.

In many cases, Nigerians may protect their money by being more intentional with their spending and saving. Too often, people spend without a plan; they react to each expense as it comes in. Also, with inflation at high levels, it is even more important to create a simple budget. This does not have to be a complex thing. It may be as easy as writing out monthly income, listing out essential expenses like food, rent, transport, and utilities, and then see what is left over. When you know exactly where your money is going, you are in a better position to cut out waste and avoid that which is not necessary, which in the long run weakens your financial stability.

Another option is to not hold large sums of your money idly. It is true that having access to emergency funds is important, but putting in large amounts at home or in a basic savings account, which in turn has low interest, is in fact harmful during high inflation. In time, what that money will buy decreases. Also, over time, the value of that money falls. Instead, out of your savings, put more in options which at least match or better inflation. This may include interest-bearing accounts, credit unions, or other easy-access financial products which see your money grow instead of just sitting there.

Diversification is a key concept. In an inflationary environment, which is what we see today, which single outlays of income are very risky. Should salaries not keep up with price increases, we see that workers do, in fact, end up doing a great deal of heavy lifting, yet for little reward. Hence, it has been noted in the case of Nigeria, many people are into the side hustle, freelance and small-scale businesses, or into talent-based projects as means to create that extra stream of income. Not only is it to improve total income, but also to provide support for when a certain outflow of funds become unpredictable.

Investment in yourself is a great, yet often ignored, tactic. Inflation impacts more than just money; it also plays with opportunities. Those that are constant in improving their skills, education, or expertise do better at which they put their hands to. In which ever form it comes, formal education, online learning, apprenticeships, self study, developing your trade adds value to you in the job market or in building out a business. Also, in that regard, knowledge is a form of shield against economic instability.

For entrepreneurs, inflation has put into overdrive, which is what, in turn, is requiring a great deal of adaptability from them. What we see is that the cost of inputs like raw materials, transport, and operating, that which is very much out of the control of the business, is going up, and this is what is putting pressure on profit margins. What we also see is that which is successful is that entrepreneurs who are able to pass some of these costs on through higher pricing when they can, that which is also at the same time are looking at how to improve internal processes and also to find creative solutions to cut costs without in any way degrading the quality of their products. Also, some are broadening out what it is they produce, which may also play to different market segments; others are looking at new markets they can sell to which they may not have before, or are adopting technology which will enable them to operate more efficient. Flexibility is what is the key to survival in a very unpredictable economic climate.

In many communities, and collectives are seen to play a role in saving, which in turn protects the economy. In Nigeria’s case, we see a great deal of informal savings groups, which include cooperatives and rotating savings, which are very much a part of the culture. These groups foster discipline, they reduce the tendency to over spend, and also provide a support structure during emergency financial situations. Although they may not be without their flaws, what they do is they create a sense of security and shared responsibility, which in very tough economic times is very much a value that is put forward by these savings groups.

A long-term oriented approach is also a very important mindset. In Nigeria, we see that many people put all their focus on present requirements, which is in large part due to daily financial issues. At the same time, though, we see that by looking at the future, even a little bit, great results may be achieved. Putting away money regularly, what may at first seem like very little, forms a habit of savings. Over time, what may have seemed such small contributions grow into something which is very meaningful, which in turn provides stability during hard times.

Also, in many cases, it is important to avoid getting rich quick schemes. In a time of inflation, which causes widespread growth in prices, we see people very much at a loss for which to use their money, and put forth great effort into making it grow fast. This, in turn, they put at risk in what may be fraudulent investment which promises to return to them far more than is usual. Also, to protect your money from inflation, do protect it from scams by being patient, skeptical, and informed before you put your funds into any type of financial venture.

Another also left out issue is lifestyle change. Inflation causes many families to reevaluate their spending; this isn’t to say live in poverty, but to make conscious choices. Cooking at home more, cutting back on luxuries, buying in bulk when you can, and putting needs before wants, which in turn will stretch your budget. Also, very often, the impact of small behavioral changes add up.

Technology has also played a role in making financial management more accessible. In many parts of Nigeria, we see the growth of mobile banking apps, budgeting tools, and digital savings, which in turn help to track expenditure and foster better habits. These tools also bring clarity, which in turn we see to be the ability to identify spending trends, and thus what areas require improvement. Tech may not in itself be a solution to inflation, but what it does do is enable individuals to react to it in a more pro-active way.

Family structures are still very much at the core of Nigeria’s economy. In many homes, we see several family members contributing to the income, which in turn creates a larger pool to weather economic storms. We also see, in many cases, that there is open communication regarding money issues within families, shared responsibility, and a large support network, which in turn puts less pressure on the individual, and which in turn creates a more resilient home unit.

In fact, at the end of the day, we see that money protection against inflation is a complex issue that does not have a single best answer. What we do see is that a mixed bag of strategies, which fit an individual’s situation, is what is put forth. Also required is awareness, discipline, adaptability, and a will to learn. While inflation may be out of an individual citizen’s control, what they do in response to it most certainly is.

Nigerians have, time and again, proven out of the great economic challenges which they have faced. In all areas, from enterprise to creative ventures, from support of our communities to that of individual determination, we see that people come up with what it takes to pull through and in fact do well in spite of financial instability. By which I mean to say that they are aware of what they spend, they put money into growth, they also diversify income, and they plan for the future, which in turn helps them to secure what they have worked for, and in that they put in place a more secure financial future in a very unpredictable economic environment.