Anyone buying a new car, or just a loaf of bread has noticed that prices are going up. The current fuel scarcity has pushed Nigeria’s inflation rate to 15.7% this year. Meanwhile, there is no increase in the average household income to beat inflation.
Over time, inflation causes you to lose your purchasing power, but there are ways to combat it even without a pay increase. Here are six places to start
1. Negotiate lower prices on everyday expenses
Getting more for your money is a good way to add value for the same price. Search for discounts/sales and negotiate better deals to help offset the constant increase in prices. Negotiating your daily expenses can be a great tool for reducing your monthly expenses.
2. Limit your wants
Reducing your wants is one of the best ways to defend yourself from inflation. Use a budget to track your expenses and identify problematic spending habits. Make sure you follow a budget to ensure you spend less on wants and prioritize saving extra cash.
3. Postpone big purchases
Not everything will always be more expensive. You should postpone purchases that are not immediately necessary to beat inflation. Some price hikes could be temporary, and, in that case, it may pay to wait it out until it’s possibly cheaper in the future.
4. Don’t neglect your savings
It’s important to keep three to six months’ worth of expenses in cash for emergencies only. Your savings and emergency fund should be in a high-yield easy access account paying as much interest as possible. Earning some interest is better than none at all.
5. Diversify your investments
To maintain your purchasing power over the longer term, determine the right assets for your investments, considering your income, expenses, risk tolerance and time horizon. Build a diversified portfolio of commodities, real estate, gold and equities to offer you some security and beat inflation.
6. Invest in yourself
One of the best ways to maintain your purchasing power over time is to invest in your own talent. Consider learning a new skill through online resources to expand your knowledge base. You can command your fair share of earnings by increasing your value to your employer
The best way to beat inflation is to understand how it affects your savings. Even though inflation is high, if you invest, cut costs, and avoid highly inflated items, you’re one step ahead of others. Remember consistently prepare yourself financially for the future and work on securing your savings against inflation.
Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man.
Visit www.overwood.ng today to start saving towards your goals and grow your money to protect yourself against inflation.