You felt the impact of the recession, didn’t you? Everybody did.
The Nigerian Bureau of Statistics says the recession is over, that the country is now back to economic growth. At least, that is what the statistics say and statistics sometimes is a strange thing. It tells you something but you see and feel a different thing.
That is why a lot of people have challenged the fact that we are out of recession. “How can they say that we are out of recession when a lot of people are still suffering?” They will ask.
But the thing is, even when an economy comes out of a recession, it takes time before the impact of economic growth is felt.
The recession we witnessed will live long in our memories because of its devastating impact. Some people lost their jobs, some lost their homes, businesses failed and even some families disintegrated.
So what lessons have we learned from this recession to avoid the devastating impact in case we wake up one day to hear that another recession is around the corner.
- The Recession: The Best Time to Make Money
- 4 Benefits of the Recession you Didn’t Know
- 8 Money Tips that Will Change Your Life Forever
Lessons from the economic recession in Nigeria
Multiple income streams is king
This is one of the sacred rules of money. Yes, you heard it right – sacred.
This rule states, “once you start earning money – no matter how small – start making plans for another source of income. It is that simple.
Let’s see how this works.
Some people lost their jobs and with it their only source of income. They went into severe hardship. It is not easy to get another job.
This is Nigeria we are talking about here, even when the economy is growing as high as 7% a year, millions of people were still unemployed. So you know how tough the job market is.
Back to our principle of multiple income streams. If you got a job and began to save at least 20% of your income, after some time, you begin to invest those savings into another thing, maybe this time something you really love.
When your new investment starts to earn you money, you start looking for another opportunity again.
It goes on and on.
If something happens to your job, it’s not a problem because you have things to fall back on.
When you don’t have options, that is where you have serious problems.
Multiple income streams is king, you have to create as much as you can.
Cash is worthless
This is simple, invest in assets. Instead of piling up cash in your bank account or under your bed, use it to buy assets.
Nigerian inflation rate skyrocketed in 2015 when oil prices plunged and it has remained very high even today.
Inflation eats up the value of money. The more prices rise, the more the value of your money goes with it.
In this two years of high inflation, if all the assets you have is in cash, am sorry to say, you have lost a significant amount of money.
Let’s say you have N1m before the inflation. Now, the inflation is at 17% per annum, the purchasing power of that N1m has gone down to N870k. That is, that N1m can only buy goods and services worth N870k.
You have lost a whooping N130k to inflation alone. The more that money remains in cash the more money you lose.
But let us assume you used that money and bought a plot of land. The value of that money keeps rising whether there is inflation or no inflation.
You might not have up to a million naira to buy a plot of land, there is always an investment opportunity for any amount of money you have.
You have to actively look for it. There is no magic in making money through investments. You just have to start somewhere and learn.
Never keep cash, you will lose a lot of money.
Save and invest
This is different from having multiple income streams. The essence of this is to build up an emergency fund. A fund that you can fall back to in case you have no income coming in.
Normally, the best way to build up this fund is to invest in a liquid asset because they are always easy to sell whenever you need cash.
During the recession, a lot of people have tangible assets like land, building etc, but they could not find buyers.
An emergency fund as the name sound must be easily accessible to you. That is why you need to save up and invest in liquid assets.
Be the best at what you do
So many people lost their job because of the recession. Some were laid off, some lost their jobs because the company they worked for collapsed.
For those that were laid off, you should ask yourself why. I know there are company politics all around. Your colleagues hate you, your boss will pull the plug at the slightest opportunity.
All that exist in companies but the one thing you should ask yourself is this “are you indispensable to your firm?”
Yes, there is company politics, your boss will probably sack you at any given opportunity. But if you have made yourself indispensable, even if your boss or your colleagues hate you, they know that you are too valuable to go.
The point I am making is that you should be good in what you do so that in case of any trouble you won’t be the person to go.
Find time to learn more about your job; read books, subscribe to industry magazines, read blogs, go for seminars, make friends with the best in your industry.
That way you have the chance to have your fate in your own hands. Instead of your firm sacking you or laying you off, you decide for yourself when you are done and move on.
Avoid debt at all cost
If you were caught up with large debt during the recession, I will like to hear your story of how you survived. It’s going to be a really interesting story.
Borrowing money is a risk, you might never know what will happen. It’s best to avoid it if you can.
Some people borrowed before the recession to invest in a business. The recession hit, and the business collapsed. They were unable to pay back. Some borrowed in dollars, the dollar value surged and naira plunged, they found themselves in a deep hole.
Then some borrowed for personal reasons: travel, car, wedding and it caught up with them.
Avoid debt at all cost
Learn to manage your money
Anybody who knows how to manage money will always find a way out in case of any eventualities.
And it’s not hard to learn. You only need to decide for yourself that you want to improve your finances and you do the necessary thing. Read finance books you will find the information you need.
Learning to manage your own money changes a lot of things for you.
What other lessons have you learned from the recession? Share in the comment. Do not forget to subscribe to our free newsletter for more