The year began with the rush accompanied by the naira redesign saga as Nigerians scuttled to return old notes to the apex bank in order to avoid being left holding a bag of valueless legal tender.
January 31st was the initial deadline and the cash crunch was something Nigerians wouldn’t forget in a hurry.
The next few months saw the much-awaited general elections and a subsequent peaceful transition of power, heralding the much anticipated Tinubu-led administration.
The first six months of the year were anything but uneventful, especially from a financial point of view.
If anything, most Nigerians learnt the need to adapt and be able to make quick-fire financial decisions to save face.
For example, after the removal of fuel subsidies with PMS selling for as high as N537 per litre, most Nigerians have learnt to cut petrol costs and trim their budgets to accommodate the new normal.
Other policies of the new administration like the proposed student loan bill and the addition of tuition fees, the floating of the naira and the elimination of dual exchange rates may also demand more adjustments from many Nigerians.
The key word here is adaptation. The ability to become better suited to new changes in your environment; in this case the new government policies that are bound to affect you and your finances.
A case in hand is the floating of the Naira in the foreign exchange market.
Although most experts believe that it is the right decision, it has caused the depreciation we have seen in the naira in recent weeks.
As a country heavily reliant on imported goods like electronics and machinery, this fall in the naira would most likely cause a rise in the price of imported goods.
How prepared are you for these short-term price spikes? Have you made the necessary adjustments to make room for the imminent price disparities?
In the world of investing, we have seen a rather quick rebound following an abysmal performance of various assets in 2022.
The stock of US tech giant Meta is up 125.69% year-to-date(YTD), Musk’s Tesla 152.92% and Amazon’s 52.26%. Other assets like digital currencies have also appreciated rapidly in the first half of the year.
Bitcoin is up 88.43%, Ethereum 55.32% and Solana 83.30%.
In Nigeria, the benchmark index tracking the performance of stocks listed on the Nigerian stock exchange; the all-share index (NGSEINDX) is up 17.28% this year. In general, it has been a good first half for investors.
How have your finances performed in the first six months of the year?
You might not have anticipated the petrol hike or the imminent hike in electricity tariff and had to make quick decisions.
It is totally normal to be caught off guard once in a while as no one has a crystal ball and can miraculously see the future. What is unacceptable, however, is failing to make the necessary adjustments to cater for these changes.
Did you maintain the same usage of your vehicles even after the prices of PMS went up? Have you considered switching to locally produced goods and shunning imported alternatives?
What is your plan for cutting down on your electricity consumption with the imminent electricity tariff hike? Do you have an emergency fund in case of an unexpected financial demand?
There is no better time than now to sit down and reevaluate how your finances performed and solutions to do better.
This is an opportunity to look yourself in the mirror and retrospect how your finances performed. These questions may help you in digging out areas where you may need to fix or improve.
- Did you create additional streams of income? In times like these when the economy is a tad more difficult than normal and inflation biting hard, it is a huge plus to have additional streams of income. It may not totally replace your current income source but may supplement and take care of some expenses here and there. Your “side hustle” may add up an extra 10% to your income for example.
- Did you work within a budget? How was your spending habit in the last six months? Did you spend impulsively on things you don’t need or were your expenses well planned and thought out? Here is a rule of thumb that experts recommend when making expenses; it is advisable to make expenses like acquiring a new gadget only when you can afford it at least twice. This would ensure you only make expenses when you have more than enough to spare.
- Did you stick to your investment plan? Admittedly, it is much more difficult to save in economic conditions like these but you may need a little bit more discipline to stick to your plan even if it means cutting back on luxury. Most money management experts recommend setting aside between 10% to 20% of your income every month for investing.
- Did you make necessary financial adjustments or were you rigid? Sometimes it is necessary to adjust a little bit in response to the current economic situation. Did you refuse to cut down on expenses even when the current economic situation gave signs of impending financial doom? Have you insisted on leaving the bulk of your portfolio in naira-based assets despite the tell-tell signs of uncertainties? It is important to be self-aware and keep reassessing your financial stance and make changes if and when necessary.
If you have asked yourself these questions and are sincere enough to give straightforward answers you may unravel the problems that held your finances back in the first half of the year.