With the current economic situation in Nigeria, managing your finances wisely is essential to cope with rising costs.
Here are 8 tips to help you handle your finances more effectively:
1. Use the 50/30/20 Rule
How you allocate your income plays a crucial role in smart money management.
To help you spend wisely and cut unnecessary expenses, follow the 50/30/20 rule. Allocate 50% of your income to needs (e.g., utility bills, rent, groceries), 30% to wants (e.g., spa visits, dining out, wardrobe additions), and the remaining 20% to savings.
Dividing your income this way helps you “cut your coat according to your cloth” and manage expenses sensibly.
2. Automate Your Savings
Saving money is often easier said than done. Even the most disciplined person can struggle to set aside money, especially with expenses piling up.
To save consistently, automate your savings so it happens automatically, without needing to think about it. Some popular apps that can help with this are Piggyvest, Cowrywise, and Fairmoney.
3. Cut Unnecessary Expenses
Small, seemingly trivial daily expenses can add up significantly over time. For example, taking an Uber when you could have taken a bus or buying a N10,000 data plan when a N3,000 plan would suffice.
By cutting back on these small expenses, you’ll find more money left over at the end of the month.
4. Be Smart with Your Shopping
Shopping malls are designed to encourage spending beyond your original plans.
To avoid falling into this trap, create a shopping list that includes all the items you need, their prices, and the total expected cost. This helps you stay within budget and avoid unplanned purchases.
5. Avoid Impulse Buying
There will be times when you feel the urge to buy something you think you “absolutely need.”
Practice self-discipline by waiting 24 hours before making the purchase. If, after the waiting period, you still feel it’s necessary, go ahead and buy it.
6. Shop Where Prices Are Lower
“Cheap” doesn’t have to mean low quality. Instead of always shopping at high-end stores, consider stores that offer quality items at more affordable prices. This way, you get good quality at a reasonable cost.
7. Stock Up on Essentials: With prices rising steadily, it’s wise to stock up on essentials before they become more expensive.
If you can afford it, buy necessities in bulk. This not only saves money but also offers some protection against inflation.
8. Look into Side Hustles
If you’ve implemented the tips above but still need additional income, consider picking up a side hustle.
This could be freelance work that requires only a few hours per week or a small business you can manage alongside your main job.
Just ensure it’s profitable and doesn’t interfere with your day job.