Tuesday, January 17, 2017 7.20 am / Ologbon-ori Taiwo
As a low income earner, you may find it challenging to expand your revenue base due to limited resources and limited time available to you as an employee. Notwithstanding, I believe a cost-cutting plan would be highly useful for you to boost your cash position while serving as a buffer to some unforeseen and economic pressure. As we keep hope against another possible currency devaluation, hike in fuel price and internet data price, it is advisable that one brace up for high inflation pressure, which is expected to swing between 20% and 30% in the year 2017.
Inflation figure for the month of December 2016 as released by the National Bureau of Statistics showed an increase by 0.07% from 18.48% the previous month to 18.55%. According to consensus from analysts, inflation is expected to climb further for January 2017. Most corporate enterprises are finding it difficult to maintain thriving and profitable postures, as they are currently devising many new ideas to boost revenue base.
In a declining economy, nobody is really immune against the recessionary and inflationary effects. And as a low income earner, you are more exposed due to your fixed low income and constant high consumption pattern. Thus, I wish to encourage you to double your cost-cutting strategy and learn to live frugally for survival. This approach can and it will tremendously strengthen and fortify your financial posture against the scotching heat from Spiral inflation. Below are the big five expenses you should cut fast as we journey through 2017.
1. Food Consumption: As we all know that consumption is constant and feeding is necessary, it is advisable that you consume wisely and spend constructively. Learn to shop from main food depot. Food items are extremely cheap in main food depot like Mile 12, Ojo-Oba, Ile-Epo/Oke-Odo markets etc. These are popular markets for good bargain. It is actually a drain on your income when you shop from nearby retail markets.
Also, learn how to do group buying. It safes you huge cost when you join a group of five to buy basket of tomatoes, yams, bag of rice, bag of bean etc. Different groups-buying are available at this main food depots, you just need to find your choice. The bottom-line is to cut your cost on feeding, spend constructively and still get good bargain and value for your money.
2. Gas and Fuel Consumption: With the recent happenings in global oil market, it is now obvious that the price of fuel would go up again or FG must bring back subsidy regime. So, it is advisable to reduce your fuel consumption and learn how to use household generators conservatively. For instance, my neighbour, who spends N25,ooo monthly to fuel generator, was shocked to hear that I spend N2.500 weekly to fuel my generator. That is about 150% difference. I told him, I have a lean-budget for anything I consider liability. I told him that before now I used 10litres per week; it is now 15liters because of private lesson teachers for my daughter. And whatever happens, I do not exceed 15litters of fuel per week. I strictly and only put on my generator for 4hours daily (8pm-12pm). My neighbour is now learning and adjusting fast, following my pattern.
3. Laundry and Car-Wash expenses: Learn to do little things by yourself, like washing your car and personal laundry. Stop patronising dry-cleaners every weekend; they are becoming too expensive nowadays. Drycleaners charge an average of N3000 for a complete suit, Jacket (average of N1,550), White shirt (average of N900), coloured Shirt (average of N850). As an alternative, you can engage wash-men for your shirts and natives. Take only your suit to drycleaners. This would save you huge cost and you will still get almost the same value.
Furthermore, you can cut-cost by 70% if you choose to clean your car yourself or ask your security-man/neighbour’s driver to help at cheaper rate. I used to pay between N500-N1000 at car-wash stations to clean my car, but now I pay N200 to 'Aboki' or my neighbour’s driver.
4. Reduce your phone-calls and data expenses: The government is likely to impose tax on phone-calls and also increase cost of data. It is advisable you cut phone calls and chatting cost or put your data usage to a better or more productive use. You can register for online courses or online skill acquisition programmes. Someone in my office recently complaining bitterly to me that his monthly phone calls and data usage cost him around N20,000. I just laughed and I told him I use N3500 monthly and my 40-Gigabyte data costs me N6,000 monthly. I recently changed my data plan to 14-Gigabyte for (N3,500) monthly.
5. Miscellaneous Expenses: These are unforeseen social expenses and other occasional cash gift, cash-support or cash-donations to friends and families. Unknowingly, this expense takes certain percentage of your low income. You may need to moderately reduce your generosity to every Tom, Dick and Harry. Give financial/cash support to only a genuine course, because recession has turned friends and some family members to 'exploitative missionaries and associates'.
Other related tips are
· Run a lean budget for everything that takes money out of your pocket
· Block Leakages, collect your balance/change no matter how small.
· Learn how to shop around to compare prices
· Do not entertain any unexplained extra-cost or unnecessary debt. Always stay within your lean budget
· Reduce your unnecessary travel cost