Every day, Nigerians face the reality of managing their finances amidst the country’s rising cost of living. Whether you’re a student, a young professional, or a family on a tight budget, learning to manage your money wisely can make all the difference. But how do you do that when you’re living on a limited income?
John is a university student in Lagos who faces a dilemma that many Nigerians can relate to: He’s down to his last ₦10,000 for the next 10 days until his monthly allowance arrives. That’s ₦1,000 per day. Will it be enough?
As he sits on his bed staring at his phone, John begins to strategize. “It’s just ₦1,000 per day,” he thinks. “I’ve survived worse.”
Although you may not be in the same #1,000-per-day situation, the following low-income budgeting strategies will help you make the most of your money.
Step 1: Assess Your Monthly Income and Expenses
Knowing what’s coming in and going out is the first step to managing finances effectively in Nigeria. Many people overlook this, but it’s vital to understand one’s financial situation before making any decisions.
Take John for example; he first takes a look at his finances. How much does he have, and where is it going? He sits down with a pen and paper, making a list of his income, his fixed expenses (rent, school fees, etc.), and variable costs like food and transport. By assessing his spending habits, he realizes where he can cut back.
Step 2: Know Your Wants and Needs
In Nigeria, the cost of living is quite high, which is why most Nigerian financial management tips stress the need to carefully differentiate between necessities and luxuries. This straightforward practice allows Nigerians to focus on the basics without succumbing to all the cravings that come with everyday life.
John proceeds to allocate his expenditures in the class of ‘needs’ or ‘wants’. His rent and groceries are needed, but going out with friends for a pizza or watching the latest movie on Netflix is a want. He reasons that for the next 10 days, there is zero need to meet his wants if he is to survive.
Step 3: Establish Reasonable Limits to Your Spending
The next logical step is to place a reasonable limit on how much you spend on stuff. When limits are reasonable, you won’t be tempted to spend frivolously on an ad hoc basis. This is essential in controlling one’s finances, and more so when there is less money available.
Sticking to our story, John decides he wants to spend ₦200 for breakfast, ₦250 for lunch, and whatever remains for transport. Assigning the amount per category such that they actually limit his expenses, means that he will not be tempted to overspend while getting the basics for the day.
Step 4: Allocate a Small Portion for Emergencies and Savings
Even on a tight budget, it’s crucial to save a little for emergencies. Many Nigerians have learned this the hard way – one unexpected expense can quickly derail your finances. Saving even ₦100 can make a difference when life throws a curveball.
This is exactly what John does—keeping ₦100 aside daily for emergencies. He doesn’t know what might come up in the next few days, but he understands the importance of having a safety net, even if it’s small. For example, what if the next allowance doesn’t come on the expected date?
Step 5: Track Spending Using Budgeting Apps or a Simple Notebook
Throughout the day, John uses a simple notebook to track his spending. Every time he buys something, he writes it down. By the end of the day, he can see exactly where his money went and adjust for tomorrow.
This technique of tracking daily expenses in Nigeria without stress is a game-changer for those on low incomes. You don’t need fancy apps or spreadsheets – just write it down. This habit gives you control over your finances and helps you make better decisions moving forward.
When you’re doing low-income budgeting or just want to know how to survive on $50 a week, you may be forced to do things that are not convenient or that you’re not used to. For example, you may want to:
Save on Food Expenses with Home-Cooked Meals
Among the items in the expenditure which account for most of the money spent, this is a top tip on how to save money in Nigeria: Cook at home instead of going to restaurants. Fast food, especially from big chains, can eat into your budget.
Take John for example, he understands that food is among the most expensive commodities today. However, he is not ready to endanger his health or his taste. Rather than ordering food from restaurants, he decides to prepare his food instead. He buys low-cost groceries and makes enough meals for a couple of days.
Reduce Transport Costs by Using Public Transport
Transportation costs rank high in the selected expenditures of many Nigerians. The good news is that public transport, sharing a vehicle with other people, and walking for short distances can help lower the everyday cost.
Our friend John resolves to rely on public buses now that he is low on cash, instead of the usual Uber, Bolt, and Lyft. It might not be the most convenient choice but it is certainly cheaper and more suitable. He also attempts to go on foot when the opportunity presents itself while further reducing spending on transport.
Consider Freelancing or Side Hustles
For many Nigerians, a side hustle or freelance work is a great way to earn extra money. Whether it’s tutoring, offering technical skills, or even selling handmade products, there’s always a way to earn a little extra cash.
John knows that relying solely on his allowance may not always be enough. He starts looking into freelancing opportunities in writing, editing, and graphic design. There’s a growing demand for these services, and it’s a way to supplement his income.
Have a Skill or Hobby? Monetize It
Monetizing hobbies can be a great way to build wealth. If you have a skill or hobby, consider ways to turn it into a profitable venture. In fact, almost any skill can be turned into an income stream. From baking to hairdressing to photography, you can look for ways to use your talents to generate income.
Wrapping Up
When you have limited income, knowing how to make what you have stretch for longer can be the difference between sanity and the streets, and hopefully, the ideas covered in this article can help.
Note, however, that these budgeting strategies for students can also work for families, but it goes beyond just adopting the tips we’ve discussed here, the key is consistency. Even when it feels challenging, sticking to your plan is essential. Over time, this discipline pays off.
