Do you ever think about how nice it would be to make more money in an economic recession? Especially in this current recession, how about spending less cash? What of doing both? This article will teach you how to save and make money in the next recession, how to prepare for an economic recession, and how to protect your money from recession.
People underestimate the power of efficient saving. A lot of people even had a reasonable amount of their wealth from their savings. “what!!! It is a lie. Rice is almost ₦20,000 a bag and a 3kg chicken is ₦3,500”. Well as weird as it sounds, you can actually save more in this economic recession.
What was worse is that I had no idea how we had gotten into that much debt. We weren’t going on vacations. We didn’t shop at high-end stores.
When the recession first hit me in 2016, although I was still getting the same monthly allowance the money wasn’t sufficiently at all. This continued for months, then I realized that I was spending a lot of money (even though my expenses/expenditures were the same). Then I started spending less and saving more. The price of certain commodities was increased making spend an extra Naira.
How did I come up with it?
Before the recession, one eggroll was sold for ₦50(with an egg inside). In the recession, an eggroll was sold for the same price, ₦50 but with a slice (not whole) of an egg.
In order to retain their customers, bakers used this technic so it won’t affect sales. Think about how your life would be if you had thousands or even millions of Naira gotten from your savings. The key to making more money in a recession is by Saving more money.
In an economic recession everything goes up, only customers drops a bit. So buying shares in an economic recession is not that much of a good idea. Instead, I recommend having enough to see you through the recession and get you back on your feet.
Best Ways To Save Money in Recession
I’m going to share a list of ways you can save more money, from spending less to saving more and how to make more money in an economic recession. So, how do you deal with an economic recession? Here are some ways you may be able to save more money by spending less in an economic recession.
I’m going to start with my favorites, the first 3 actually worked for me and my some of my friends that applied it.
1. Keep track of your spendings
Always know what you spend your money on. Don’t just store it in your head, write down everything you spend for 30 days, sum it up and evaluate. This is the easiest way to prepare for an economic downturn & protect money from an economic recession. Remember the phrase
“Money slow to enter,
Money quick to go”
Well, your money won’t be exhausted quickly if you know where they are heading. When you accomplish this task, you can easily change your spending habits. Just spend as you normally do, and normalize your spending.
Whether you use pen and paper, spreadsheet or take notes, you will be able to evaluate your monthly spending and get an instant forecast on how to save more. Using this method you have the power to save 23% of your monthly allowance/salary.
I learned this lesson the hard way myself, I came to Lagos (January 2018) with ₦20,000 but remember only spending ₦5,000 on data and ₦2,000 on the drug. Then where did my ₦13,000 go to? Ever since I keep close tabs on my cash.
2. Take note of the irrelevant items you buy
You already have 6 sneakers and you are planning to buy an extra 3 for school. Why do you need 3 more? If the 6 of them that are in good conditions, you may be permitted to get just one. Taking notes of irrelevant items you purchase and canceling them out of your budget is probably the best investments you can make during a recession.
1. Good mindset
A good mindset is one of the first steps you need to take to begin your journey. your mindset determines your actions.
2. Proper money management
If you can train your mind to think of money differently, you can learn to handle money better. You should know that every “small” insignificant purchase you make piles up to a very “big” significant debt.
3. Value-based spending
Having a value-based spending lifestyle is commendable, but only if you know how to live within your means. You can spend the same amount of money, but get more value out of it. When you spend money based on your values, you feel good about what you actually purchased.
Use money as a tool to achieve your goals and not something to just spend mindlessly. It’s super easy to justify your purchases (sometimes unnecessary) when you believe you are.
4. Spending money in line with your philosophy/goals/ values.
In order to determine if an item is insignificant, you first analyze that product then find out it’s worth to you.
Always ask yourself this question “Is this product really needed now?” or “is or right to get a loan to purchase this?” Then you would’ve followed up with other questions.
Of course, there is/are no right or wrong answer(s) with value-based spending. Only you can decide which purchases are worth the money to spend on them. Using this method, you can save up to 40% of your earnings.
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5. List Your Financial Goals
A financial goal or financial target is an objective which is expressed in or based upon money. Examples include debt reduction, sufficient wealth to retire or minimization of tax, being debt-free, Being financially independent, Having enough cash to pay for your kid’s education, start up a new business, buy a new car, etc.
Financial goals are simply priorities and targets you set for how you want to spend and save your money.
Do you have any idea what financial goals are? Many people don’t. Instead, they just work to make it through the month, collect your salary/wages, pay the bills and hopefully be left with something one Naira or two in your bank account. When you have this mindset, why you go broke?
The financial goal is an organized way which you plan on how to spend your money. Financial goals help give you a big picture and a perspective on your money.
There are 3 major types of financial goal. Short, medium and long-term financial goals.
Short-term financial goals are goals you can accomplish in a year or less.
Medium-term financial goals are goals you can accomplish in or between one to five years while long-term financial goals are goals that will take you five years or longer to accomplish.
Only you can decide which financial goals matter most to you. Once you do, it will go a long way in motivating you to spend less money and save more money.
6. Make a budget and stick to it.
A budget will help you establish a foundation that will direct your spending. When you live according to your monthly budget, you’ve got a tracking plan in place.
Like I said in point 1 & 2, proper planning can save you a lot of money. Value-based spendings and financial goals help determine your budget.
Learning how to create and live on an allocated/specific budget every month will help you reach those goals. Even if you hate a shit of paper telling you what to do, a budget is an easiest & fastest way to attain your financial goal.
7. Watch your Expenses.
Having a value-based spending lifestyle is commendable, but only if you know how to live within your means. It’s super easy to justify your (sometimes unnecessary) purchases when you believe you are spending money in line with your philosophy/goals/ values. Still asking “what to do with my money during a recession?”
Here is where the needs and wants topic come to life. Here are the best ways to manage your expenses.
* Saving Money on Housing
Of course, shelter is essential to life even if it cost you a fortune. Housing is one of the biggest expenses a person or family can have. When the price of a 3-bedroom flat is least ₦350,000/ year($1,000 a year [This money is enough to start a mini-importing & exporting business that would fetch you millions]) and₦600,000/year at most.
You had no idea that your biggest enemy was right under your nose, literally and figuratively speaking. Your housing and maintenance amount for over 62% of your annual expenses. Anyways, here are some best ways you can save more money on housing.
* Be mindful of water usage
Turn the water off when you brush your teeth, in shower and washing plates(doing dishes).
All of these little moves can add up to big savings on your water bill.
* Spend less on housing repairs
Learn to maintain what you have, also consider doing repair or installation jobs yourself. Little jobs like fixing faucet sink or rewiring can be easy with a little training.
* Rent out a room(s) in your house
Renting a room or two is not such a bad idea. They do not only save you some money but help fetch you a lot of cash too.
*Saving Money on Transportation
Apart from the shelter a lot of other factors can greatly affect your pocket. Transportation is a must-have in most areas. However, there are a lot of ways you can save money on transportation. Here are some ideas.
– Plan ahead of large expenses i.e. Buying a new car.
– Watch your car expenditures i.e. Maintenance etc.
– Live within a close distance to work
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There is a lot of advantages attached to the one, you can carpool with your neighbor, you could take the bus, close enough you might be able to walk or bike to work. It not even advisable you live at a distance more than 30 minutes of your workplace.- If you prefer driving, drive with fuel efficiency.
*Saving Money on Food and Groceries
An average Nigerian family of five spends around ₦7,500/week(₦400,000 annually) on foodstuff.
There are several ways you can save money on groceries at home. You can:
I estimate that an average Nigerian family of five spends between ₦16,440 and ₦38,260 on groceries each month.
As a mom of four kids, my grocery budget never exceeds $600 a month. Here are some tips on how I reduce my grocery costs and how you can too.
-Use a menu plan
– Go for less expensive meal plans
– Buy in bulk
– Minimize your food waste
* Saving Money on Your Health
Taking good care of your health also saves you a lot of money. Besides health is wealth. You can save money on wealth by:
– Preventing a disease outbreak.
Exercise regularly and eat plenty of green vegetables, be conservative about the consumption of sugar and processed foods. Avoid activities or habits that are harmful to your health. Some examples are smoking and excessive alcohol consumption.
– Have health insurance.
And that’s it. I made money from the last recession by saving and taking upside hustles/Shifts/part-time jobs. Recession is more like famines and can be really harsh. But if you stack up enough nuts for winter, you’ll be ready. So, which one are you going to try out?