The Cost of Living in Nigeria

Inflation is something we experience every day. It affects every part of our economy, but more importantly, it impacts our everyday lives, influencing the decisions we make about where we shop, how much we spend, and even how often we engage in small treats.

In this newsletter, I will discuss how inflation affects our wallets, our financial confidence, the economy and how to manage our resources better.

Everyday Essentials

When prices go up, our purchasing power will reduce. This means that the naira we earned yesterday doesn’t buy as much as it did. For instance, if fuel prices rise, transportation costs increase, and so does the price of goods that rely on transport basically, almost everything. Suddenly, that weekly shopping list gets tighter.

But inflation also shifts what we choose to spend on. If food prices spike, we might spend more on essentials, cutting back on things we enjoy, like a dinner out or a weekend getaway. Recently, with the cost of rice, cooking oil, and even bread on the rise, we see the need to budget more carefully.

Think about your own household budget. What items do you find yourself cutting back on when prices go up?

Ask Yourself: What adjustments have you made in your daily spending due to the changing value of the naira?

Have you switched to more affordable products or shopped at different outlets to get better deals?

1. Inflation affects our naira’s buying power: As prices go up, our ability to afford the same goods goes down, especially for imported items.
2. Everyday spending habits change: When costs rise, we adjust what we buy, focusing on essentials over extras, which affects local businesses and economic growth.
3. Consumer confidence reflects our financial stability: When we feel uncertain about the future, we hold back on spending. This cautious approach impacts businesses and the economy.

Inflation is affecting us daily, but by staying informed about the economy and how it affects our spending, we can make smarter decisions, manage our resources better, and even prepare for the unexpected.

Tips

Budget Wisely: Create a detailed monthly budget that reflects your essential and discretionary expenses. Prioritize needs over wants and be flexible in adjusting your spending habits.

• Shop Smart: Take advantage of discounts and sales. Compare prices at different outlets and consider bulk buying for items you use frequently to save money in the long run.
• Purchase Local Goods: This often comes with lower prices than processed goods. This can help you save money.
• Build an Emergency Fund: Set aside a small percentage of your income each month to create an emergency fund. This will give you a safety to rely on during times of rising prices or economic uncertainty.
• Stay Informed: Check news and trends that affect inflation and consumer prices. Understanding the market can help you make better financial decisions and anticipate changes.
• Evaluate Investments: If you have investments, consider their performance against inflation. You may want to diversify your portfolio to include assets that historically perform well during inflationary periods.
• Negotiate and Communicate: If you're facing rising costs, don't hesitate to discuss your financial situation.
• Leverage Financial Tools: Use budgeting apps and tools to track your spending and identify areas where you can cut back or save more effectively.
• Stay Flexible: Adapt your financial plans based on changing circumstances. Being open to adjustments can help you navigate tough economic times more easily.

Thank you for reading this edition. We’d love to hear how you’re adjusting to inflation.