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5 Ways To Protect Your Salary From Inflation

If your salary was ₦500,000 in 2017, it’s now worth ₦285,000 in 2022. That’s a whopping 43.92% depreciation rate, all thanks to the rising inflation

Salaries aren’t the only thing being affected by inflation; food items are too. For instance, a loaf of bread that cost as low as ₦350 in 2020, now sells for as high as ₦800 in 2022. 

As a result, life has become increasingly difficult for many Nigerians, especially salary earners. One of them is Bolaji, a banker who earns ₦200k/month. Bolaji couldn’t help but lament (and break down) while speaking to us. He said:

“I’m surviving, not living! Because you can’t tell me this is life. No matter how much I try, I exhaust my ₦200k salary before the middle of each month. I always end up borrowing to manage my lifestyle for the rest of the month. I really want to stop living from hand to mouth, but it’s hard! Food is ridiculously expensive. Transport prices keep going up. Fuel is scarce. I cannot even save to further my education. Whew.” 

You would think low-salary earners are the only ones suffering the brunt of inflation, but they’re not alone. High earners aren’t exempt either. Sarah, a product manager earning ₦1.1 million/month, falls in that category. 

Despite earning what appears to be the dream salary of many, Sarah can’t live the luxurious life she desires. In her words,

“It’s shocking to know that I can’t afford a baby girl lifestyle comfortably. I live on the island, so I have to pay outrageous sums monthly in the name of service charge. Food and grocery prices also seem to double every week. 

Also, I’m having to pay as high as ₦120k for electricity monthly. Coupled with black tax, I’m often left with a little sum to spoil myself or save for my ambitious goals. At the end of the day, inflation is a national cake and we’re all chopping out of it — rich or poor.” 

If you share the same plight as Bolaji or Sarah, here’s how you can protect yourself henceforth from the clutches of inflation. 

1. Use a high-yielding savings account. Saving your money in your traditional bank account means leaving yourself vulnerable to the negative effects of inflation. Instead, consider keeping your money in high-yielding savings platforms like PiggyVest. For instance, when you save in a Piggybank wallet, you can earn as high as 10% returns. 

2. Consider buying food in bulk. Remember when your parents used to say, “There is rice at home”? Well, now is the time to practice that. If you want to protect your money during this period, you need to reduce (or stop) eating out, buy foodstuff in bulk, and cook at home. While this approach doesn’t protect you from inflation completely, it goes a long way in saving you a lot of money. 

3. Try saving in an alternative currency. While saving in high-yielding naira savings accounts is great, saving in alternative currencies like the US dollar is even better. Holding cash in currencies with a much lower depreciation rate than the naira is key to protecting your money during inflation.

4. Diversify your investment portfolio. If you currently have an active investment portfolio, you’re one step closer to maintaining your purchasing power. However, you won’t get the best out of your investment if you’re gaining from just one asset, as the inflation rate might reduce your profitability. This is why you need to mix your investment portfolio. In particular, prioritise real estate and short-term bonds as they’re both somewhat inflation-proof. 

5. Earn more. You suffer more from inflation when your income is stagnated. For this reason, you need to look for creative ways to increase your income streams. You could seek a promotion at work or even juggle multiple jobs. If none of these options work for you, consider starting a side hustle or monetising any of these skills

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