Surviving the inflation with Money Management skills

ionicons-v5-k By Adeola June 7, 2022

Here is a simple truth; it can be difficult to learn and abide by tried and tested money management skills for everyday use. Yet, the road to financial and mental wellness is steeped in the implementation of these skills especially for the person who wants to transition from just having money to having sustainable wealth and the wellness that comes with it.

Money will always come and go; yet with money management skills one is able to weather the storm that may arise. Learning financial principles and developing the discipline especially in times like this – the inflation times, not only helps one stay above the turbulent economic waters and security but taking into account the unique needs, goals and risks associated with an individual per time; but most importantly it allows one have a unique awareness of external factors outside of one’s control such as change in tax policy, inflation, debt and market volatility.


Today, we will be talking about a popular topic ‘inflation’ and how having money management skills can help you tide this season. So, let’s kick this off with what Inflation means. This inflation we hear left, right and center what does it mean? In simple terms,” inflation is when there is a general increase in prices of common goods and a decrease in the purchasing value of money”. To illustrate better, we say inflation is when you pay N2000 for a haircut of N1000 that you used to pay Kamoru N800 for. Ultimately, Kevin Brady said it best when he said “inflation destroys savings, impedes planning and discourages investment; which leads to less productivity and a lower standard of living”.

So, let us answer the popular question – Is inflation good or bad? The truth is inflation is considered a good or positive thing when it drives economic growth and helps to boost consumer demand and consumption of goods; yet there is a school of thought that believes that inflation is a total burden on the economy.


How does inflation affect us?

  • Borrowers benefit from unanticipated inflation because the money they pay back is usually worth less than the money they borrowed.
  • Lenders bear the brunt of unanticipated inflation because the money they get paid usually has less purchasing power than the money they loaned out.
  • Inflation invariably favors those with large debts who with rising prices find it easier to pay back their debt.
  • Yet, inflation will hurt those who keep cash savings and those with fixed salaries because the value of money falls and they can only purchase relatively fewer products than previously.


How does your money management skills help you manage the rising inflation in the country?  One of the primary money management principles to practice at this time is defining your needs and wants via a budget. With inflation; you are forced to sit up and focus more on your needs as against your wants because of the increase in your basic cost of living. With every increase in price comes the reality check that your disposable income has and comes with the ability to keep reducing which invariably affects your savings over time; that is if you have any savings.


The simple analogy to understanding the correlation and impact of having money management skills especially during an inflation vs not having the skills to navigate these difficult times is understanding that the prices of basic everyday staples like your food, fuel, electricity tariff, clothing, home maintenance and services has increased and keeps increasing; while there is absolutely no increase in your income especially for the common man on the street. The sad reality is with an inflation increase from 15.70% in February to 15.92% in March of 2022 of about 16.4% with no intent to decrease, it stands to reason that lean living should be the best strategy to adopt at a time like this.


Quick tips on how to ride out the Inflation.

  1. Always plan ahead and shop ahead – with the rising cost of foods globally and insecurity in the country; the cost of food will keep rising. Now is the time to do comparative analysis before shopping for items whether in the market or online. You want to be sure you get the best price and value for your money.
  2. Invest your cash – in an inflation, having cash sometimes means you are losing money because your purchasing power reduces. It may be wise to hedge such cash in investments which includes stocks to generate enough investment returns that can offset the inflation cost. Another option may be to invest in Treasury Bonds which increases with inflation; the good thing is upon the maturity of the bond; the investor is paid either the adjusted or original principal whichever is greater.
  3. Invest in yourself and be so good at what you do – When you invest in yourself you are able to maintain your purchasing power and value over time. What this means is when you are able to offer premium skills, you can in current market fees.
  4. Limit your wants – track your expenses through the use of a budget.


Conclusively, your priority at this point will be to ensure you are not spending frivolously so you do not incur debts and let’s quickly remind you that if you MUST take a loan to service your debts, ensure that you have a repayment plan before you put yourself in such a  situation; it will also be advisable to only approach lenders with the right license as specified by the Central Bank and other regulatory laws.


The social media space is agog with unpleasant news of how loan sharks have taken advantage of borrower’s incapacity to pay to propagate many untoward things to them leading many to a path of destruction, mental break down, loss of friends and families, isolation, depression and in recent times an increasing number of suicides. Your mental wellness is of utmost importance and one of the things you can do for yourself is to ensure you avoid situations that pressure your mental capacities adversely.


With love and wellness

Proshare Foundation team.

Adeola Posted on June 7, 2022