
As inflation soars, unemployment numbers rising and the exchange rate depleting against the dollar, many Ghanaians are generally struggling to adapt to these life-changing situations and undesirable conditions.
Most Ghanaians are having to deal with financial stress and uncertainty at this difficult time, whether from job losses, increasing debts, rapid rise in gas, domestic consumables, and transport. It is normal to feel overwhelmed when the economy is struggling, evident from all its economic indicators.
Like any problem, financial stress can have a big impact on your mental and physical health. It can increase your risk of depression and anxiety; make you feel angry and ashamed and even affect healthy relationships you have with others. You may end up drinking, taking drugs, or gambling to try to escape such worries. In worst case scenarios, it can even create suicidal thoughts. Financial stress affects your overall quality of life.
However, as a Ghanian, you can handle this financial stress by implementing some tactics which will help you manage your resources, especially money; in the best possible way, such that you will not be overwhelmed by the recent and continuous increase in the cost of living.
These are general steps you can take as a Ghanaian to ensure that you become financially resilient and even bounce back from hardship.
- Devise a Budget.
Do your best to draw a budget that will serve as a guide to expenditure. A budget generally gives a view of items you NEED. Looking at the current economic conditions, your budget must focus mostly if not only, on stuffs that you cannot do without. Such items may include rent, foodstuffs, medicine, basic utility, transportation, etc. The list may be different across individual Ghanaians but the key thing to note is that they must be NEEDS and not “wants” or “fantasies”. The 50/30/20 budget method offers a great guide. It simply means:
- 50% of your fixed income or net income goes toward living essentials, such as rent, utilities, groceries, and transport.
- 30% is assigned to discretionary expenses, such as clothes or recreational activities for yourself or kids if you have any.
- 20% allocated towards the future—saving for retirement, paying down debt and emergencies.
In the current situation where there is sharp inflation on consumables; 30% to discretionary expenses may be too much, you may decide to reduce it and add to the 50% so you can afford more basics or consumables for your household or yourself.
- Reduce Your Current Expenses
Consider focusing on ways you can cut expenses and divert funds into your emergency savings; or where likely, to fund your basic needs due to inflation. Common examples may include reducing the number of times you decide to dine or “party” out, reducing or putting an end to impulse purchases, deferring your subscriptions on streaming services, finding a lower-cost data plan, etc. This habit can free up extra cash which may likely go a long way to reduce your financial stress.
- Create an Emergency Fund and have a reasonable amount of money in there.
One painful experience to have in this current hardship is to face an unexpected expense such as flooding at your home, car repair, medical bills among others. It is very key to set aside funds for such unexpected expenses. The future cannot be predicted entirely, however the money you have in an emergency fund could cushion you against any unexpected financial crisis you are likely to face. Always remember to keep this money liquid in cash equivalents such as credit union, money market mutual funds, or short-term deposits.
- Limit Borrowing and reduce debt to the barest minimum
Maintain a low debt-to-income ratio. Do not borrow so much against your disposable income. Borrowing so much against your disposable income reduces the amount of cash available to you to take care of your basic needs and emergency savings. Considering the current interest rate on loans, the probability of defaulting in servicing loans you take is very high. You may end up paying penalties in addition to principal and interest because of defaults and this is going to increase your financial woes. In simple terms, do not borrow more than you can conveniently pay. The current economic condition is not conducive for anyone to borrow with the aim of using the fund to manage his/her personal, family or domestic upkeep.
As you assess your debt and spending habits, remember that anyone can get into financial difficulties, especially at times like this. Do not use this as an excuse to punish yourself for any perceived financial mistakes. Give yourself a tap at the back because reading this alone shows how strong you are to make it this far in these tough times as a Ghanaian. All hope is not lost, just stay focused on the aspects you can control as you look to move forward.
Edem Korbla Agbavor