Budgeting for Your Household amid Rising Inflation

Omolabake  Fasogbon

This is not the best of time for West Africa’s largest economy. Nigerians are inarguably in one of their toughest times in recent times. Evidently, Nigeria’s inflation rose to a 21-year high of 29.9 per cent in January 2024, which according to National Bureau of Statistics (NBS) data, was the highest since 2003.

In the report also, food inflation rate in January 2024 quickened to 35.41 per cent on a year-on-year basis, which was 11.10 per cent points higher compared to the rate recorded in January 2023 (24.32 per cent).

Soaring food prices have been a major challenge in Nigeria, since after President Bola Tinubu announced the end of fuel subsidy payments during his inauguration on May 29, 2023. This has seen different forms of protests in the country, from Niger, to Kano, Osun and some others States.

The upward trend in the prices of these staples as well as other products has weakened the purchasing power of many citizens, making it difficult for many households in the country to afford daily meals, with more and more people sliding into poverty.

With the latest inflation numbers, households now grapple to meet up with life’s essentials including clothing, shelter, health, transportation and children’s education which prices are also constantly rising like food.

The fact remains that Nigerian citizens are now paying more for few with income that does not commensurate with prevailing market prices. 

While food remains a basic necessity of living, life’s reality still pegs on biblical truism that ‘Man shall not leave by bread alone’. 

Unfortunately, the situation in the country: has come to stay for a long time, as experts argued that it may not be peculiar to Nigeria or Africa alone. For instance, the UK economy has entered recession after recording two successive quarters of negative economic growth in the second half of last year, official data showed on Thursday. Gross domestic product in the UK shrank by 0.3 per cent in the fourth quarter of 2023 after contracting 0.1 per cent in the previous three months, the Office for National Statistics revealed in a statement, meeting the technical definition of a recession.

For households in Nigeria, experts have advised that with little resources, there must be need for budget preparation. In realising this, a proper household budgeting is advised to balance income and expenses, while securing future finances. 

THISDAY spoke with some experts who offered some nuggets for effective household financial plan. Founder of OGE Group, who is also a Professor of Finance, Godwin Oyedokun, shared some the tips below:

– Start by tracking your expenses for a few months to understand where your money is going. Categorize your expenses into fixed (e.g., rent, utilities) and variable (e.g., groceries, dining out) costs.

– Based on your analysis, set a realistic budget that aligns with your income. Allocate amounts for each category, including non-negotiable expenses like rent and bills, as well as flexible categories such as groceries and entertainment.

– Given the rising food costs, make sure you prioritise essential items like groceries, healthcare, and transportation. Avoid unnecessary expenses.

  -Plan your meals in advance and create a grocery list accordingly. Stick to this list while shopping, avoid impulse purchases, and compare prices to make informed decisions. Consider buying in bulk or using loyalty programs to save money on groceries.

– Cooking meals at home is generally more cost-effective than eating out or ordering takeout. Explore simple and budget-friendly recipes, and consider batch cooking to save time and money. Leftovers can be utilized for future meals. 

– Save on utility bills by being mindful of energy usage. Turn off lights and appliances when not in use, adjust your thermostat to conserve energy, and consider investment in energy-efficient appliances if financially viable.

– Look for discounts, offers, and coupons while shopping for groceries or other household items. Many stores have loyalty programs or apps that provide additional savings. Consider using cashback apps or websites that offer rebates on eligible purchases.

– As circumstances change, regularly review your budget to ensure it aligns with your evolving needs. Adjust allocations based on fluctuations in food costs and other expenses.

– Set aside some money monthly to cover emergency expenses. This can provide a safety net during times of financial stress, including rising inflation or unforeseen emergencies.

– If you find it challenging to manage your finances or need assistance in creating a budget, consider seeking help from a financial advisor or using budgeting tools and apps that can automate and streamline the process.

Similarly, Vice President, Association of Certified Fraud Examiners (ACFE), Lagos, Chapter, Dr. Titilayo Fowokan, suggested that families should try to identify and embrace substitutes for household requirements. 

She also urged everyone to go green. 

“Going green comes at a low cost. Organic consumption should be given first choice over inorganic and processed meal which comes with inputted Value Added Tax (VAT) to bring them to consumers’ reach.

“More so, endeavour to avoid waste.  Waste reduction would facilitate identifying the quantity of food consumable by the family at once with little or none to be disposed of,” she said.

She added, “Strive to eat balanced diet. This will save you hospital cost.”

Also lending his voice, an economist, Ajibola Olude, advised couples to pool resources for profitable investment. 

“There is no better time to consume what is produced in Nigeria than now”, Ajibola added.