If you are a regular reader of the blog, you will recall I
did a piece on living in trying times, you can get it here. Without mincing
words, Nigeria’s economy is going through difficult times and this is not just
peculiar to our dear country alone, it is a worldwide issue. With the dwindling
oil prices, major oil producing countries have been adversely affected, and
countries with major dependence on this commodity with Nigeria topping the
chart are having serious economy crises.
The current global economy down turn is caused by the
following: The slow and declining growth
in China and the Euro zones, raising global terrorism cases and increase in the world oil supply and if you
remember from the law of demand and
supply , that the higher the supply the lower the price and Nigeria as a country
cannot do anything about it, what other oil producing Countries like ours are leveraging
on is diversion into other produce such as Agriculture, IT, Mineral resources etc.
which Nigeria is yet to properly take advantage of, and utilizing the external reserves to handle
projects and reoccurring expenditure. The mismanagement, and looting of our
reserve does not give the country the option of falling back to make use of the
external reserve hence our urgent need to loan funds from IMF.
Devaluation is a monetary policy tool. ‘It is a deliberate
downward adjustment to the value of a country’s currency, relative to another
currency, group of currencies or standard’-Investopedia.
Nigeria has devalued its currency twice now and
contemplating the third devaluation, and that is the more reason why we need to
look at its effect on our personal finance and what we can do to reduce the
impact on us, I must stress that we can only reduce its impact we cannot escape
it hence the need to adjust ourselves to the matter arising.
What is the implication of the above to the
common man?
a)
It means that there will be a rise in the cost
of import as against exports. Imported goods will cost more.
b)
High cost of borrowing.
c)
Tighter monetary policy and increase in taxation
to be paid (like the stamp duty to be paid on inflows into current accounts
etc.)
d)
Higher inflation etc.
e)
Anticipated job losses and salary reduction
because of high cost of doing business in the countries.
DECISIONS TO MITIGATE AGAINST THE
ECONOMIC ISSUES:
1)
Prudency in cash management: Effective cash management is key this season,
as all purchases need to be tested well before being made.
2)
Avoid imported products as much as possible, as
the prices are higher and more expensive, seek for alternative locally made
brands and goods.
3)
Manage your taste for luxurious goods, I will
advise you to spend more on the basic needs rather than luxurious things.
4)
Invest in capital projects with wisdom; do not
invest in capital projects at the expense of the basic needs of food, shelter
and clothing.
5)
Work smarter and harder to avoid been sacked for
whatever incompetence reason.
6)
Use your clothes and shoes well so you don’t
have to change them almost every time, this will save you some money.
7)
Say No to Aso-Ebi, you need every kobo.
8)
Haggle Price well to get the best bargain
always.
9)
Do not take a personal loan without proper analysis.
10)
Multiple streams of income are needed more than
ever before. A tip if you have to sell anything I will advise you sell food
related items because food as one of the basic needs of man must be satisfied
first before others are thought about.
The list is opened for you to add more as we need to help
ourselves get the best of the situation.
I remain your friend and Personal Finance Coach Babatunde
Ayorinde, follow me on twitter @pistis03,
And if you like to engage us to speak in your program or for
adverts send us mail at babat09@gmail.com.
Thanks for reading, invite you Family, Friends and Foes to
read the blog, as we move ahead to our financial freedom.
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