According to the
recent GDP report released by The National Bureau of Statistics (NBS), the
economy recorded a positive growth after five consecutive quarters of
contractions since Q1 2016, signifying
that Nigeria is technically out of recession.
As the economy begins to emerge from recession, so too should consumer
confidence in the market, which will lead to greater consumer spending. However,
is too early to start to celebrate, as it will take some time to fully bounce back from the recession and before
the impact of growth begins to be felt by households.
In many ways, the
change in our spending behavior, even though forced, has been an important
lesson and a stark reminder of the importance of financial planning. While recessions can certainly disrupt your
usual lifestyle, planning ahead and showing discipline during a recession can
help you come out relatively unscathed.
cyclical so it will happen again. You cannot completely recession-proof your
finances but you can certainly take
some steps to take the edge off the sting. Here are a few:
The recession forced
most families to look critically at their expenses, to down size and cut back.
Some were paying rent that they were struggling to afford and had to move to
more affordable accommodation. Some children had to be transferred from schools
that were crippling the family budget to more affordable options with decent
standards and which the children are thriving and happy.
If you have learned
some lessons about being more frugal and conscious of your spending, it is a
good thing to maintain this and ease the pressure you find yourself under. Ask
yourself the hard questions and answer them honestly. Would your standard of
living fall drastically if you moved to a smaller apartment in a more
affordable neighborhood? Do you need all that office space or can you sublet part
of it? Are your children in a school that you cannot afford and is their education
causing you to go into debt that is spiraling out of control?
Have an Emergency Fund
Make saving a
constant, no matter how little. We all need that cushion to tide us over during
unexpected events. Things happen where you need some cash; expect
expenses like car repairs and new tyres, doctor’s bills, home repairs that
suddenly appear and must be taken care of; you don't want to have to sell assets to meet those needs. Ideally, it
should be six months of your expenses set aside in an easily accessible
If you have no
savings, you really need to get started.
Diversify your Investments
professional advice and review your investment portfolio and consider
rebalancing, if necessary. Are all your investments in the stock market, in one
company, or in one currency? If all your
money is in one asset class, it is almost impossible to mitigate risk. Asset
classes tend to perform differently. With a diversified portfolio, you are
generally in a better position to ride the market volatility without being
forced to sell at a loss. Always think long term in your investment outlook so
that short-term crisis do not cause shocks.
Invest in Yourself
You are your
greatest asset and you owe it to yourself to continue to improve yourself. When
last did you invest in yourself? Don't wait for your employer to develop you;
indeed many companies cut back on training and it will take some time in the
recovery for companies to increase spending. Fortunately, there is so much information
and great material online; you can enroll for some outstanding courses that are
“Your network is your net worth”. Invest in your network and the people that you spend time with.
Networking provides you with new ideas, opportunities, and contacts. Make this
a way of life and not just when you need assistance or during difficult times.
Create Multiple Streams of Income
There are only two ways to make
more money; cut back on expenses or to increase your income. With the number of
lay-offs experienced during the recession, it is clear that job security is a
thing of the past. Even if you feel that your well-paid job is relatively
secure, it is a good idea to have a backup plan, an alternate source of income
so that if one source is threatened, you have others to fall back on.
There are endless possibilities for creating additional income
creative and determine what skill or knowledge
you have that others would pay for and what problems you can provide solutions
for. It is then that you can focus on building this into a marketable opportunity.
As long as there is
no conflict of interest, your employer is in the know, and does not affect your
productivity, consider freelancing, consulting or putting one of your talents
to use on the side. For most people, it is unlikely that your salary will meet
all your needs. Every extra little bit helps. When
extra money comes in, you can start to pay off your debt and invest for the
financial planning underscores the importance of managing money in ways that
allow us to enjoy the good times and be prepared for the inevitable challenging
one. If you develop these
habits and make them a way of life, you will be much better prepared for the
next recession; there certainly will be one.