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Don’t let Lifestyle Inflation Jeopardize Your Financial Future – FBNQuest
A phenomenon that is often less obvious to most people is lifestyle inflation, otherwise known as “lifestyle creep”.
It occurs when a rise in discretionary income, the amount available to an individual after making essential expenses, prompts an increase in living standards as luxuries become new necessities.
Financial literacy is an important aspect of learning what strongly impacts your quality of life. It affects your ability to navigate through economic downturns and your response to unexpected financial windfalls. Changes in financial fortunes happen to us in varying measures, influencing how we save, spend and invest.
Without a plan, it becomes more difficult to resist increased spending: the urge to upgrade your cable subscription, enjoy fine dining, add more items to your cart, and add a few more luxuries to your travel experience.
The list of possibilities is endless when you have more money to spend on optional items. It all adds up quickly and when you adapt to your new lifestyle, it becomes more challenging to give up former luxuries that now feel like necessities.
It’s not all bad though. A measure of lifestyle inflation is unavoidable and not entirely unacceptable. It is okay to reward yourself, however you must avoid situations where subtle increases in your expenses become obstacles on your path to achieving your financial goals.
The younger population, in particular, should pay more attention to lifestyle inflation given its potential long-term impact on investment goals.
Research in the United States indicates that most inflation-adjusted wage growth occurs in the early working years of the population.
It is likely that a similar pattern occurs in Nigeria. This implies that failure to keep lifestyle inflation under control in your early working life may cost you the opportunity to make investments that will be more valuable later in your career.
Lifestyle inflation can be best managed by creating a system that makes it easy to save and invest your money. Here are two simple recommendations that could help you build habits to limit the impact on your financial goals.
- Create a reverse budget that treats your goals as bills: This is a simple spending plan where your primary focus is on saving and investing first, before taking care of any other expense.
- Automate your finances, especially your savings and investments: Few people find a way to increase their savings over time, however, modern technology has provided platforms that make it easy to escalate savings and investments routinely.
The great thing about automating your finances is that it offers an opportunity to seamlessly create a new habit. Research shows that you are more likely to succeed at things that become habits than at things that require change because we are wired as humans to resist change.
FBNQuest Asset Management offers you the opportunity to automate investments in one of a series of products that best fit your financial goal. If you are a conservative investor, you may consider making regular investments in the FBNQuest Money Market Fund.
If you are more risk-tolerant, you may decide to seek higher returns by investing in the FBNQuest Equity Fund. Automatic debits could be made monthly from your bank account.
Creating a system for financial success is all about making intentional choices with our money. A good system will direct your money to the things that matter most and keep you on track to handling lifestyle inflation.
Legit.ng recently joined forces with the Shade of Life Foundation to become a voice of autism, and drive advocacy for improved media support during Autism Awareness Month.
Participants at the event
Conversations around media support exploration was led by Joseph Omotayo, head of Department for Human Interest Stories at Legit.ng, and Dr. Eziafakaku Nwokolo, founder and CEO of the Shade of Life Foundation,
This partnership is a response to the concerns raised by organizations like the Shade of Life Foundation about the level of support received from the media in discussing autism as a disability.
While other disabilities may receive attention, autism, with its critical developmental implications often lacks adequate representation in mainstream media.
Recognizing the importance of addressing these concerns, Legit.ng took proactive steps by integrating itself into the essence of autism awareness.
It facilitated a one-hour workshop with Dr. Nwokolo, the founder of the foundation, to deepen our understanding of autism, its various spectrums, and the language boundaries associated with it.
Other steps we took in advocating autism awareness in the media, can be seen in our attached press release.
Legit.ng believes that by amplifying the voices of autism and advocating for better media representation, we can contribute to creating a more inclusive and accepting society for all.
While 85 per cent of Nigeria is in darkness, Tanzania, an African country has shut down five hydroelectric stations in a bid to reduce excess electricity in the national grid.
Kassim Majaliwa, prime minister, Tanzania, has said the main plant, Mwalimu Nyerere Hydroelectric Station, alone generated enough electricity to power major cities, including Dar es Salaam, the country’s commercial hub.
It is the first time Tanzania, which suffers chronic power shortages, has closed hydroelectric stations due to excess production.
“We have turned off all these stations because the demand is low and the electricity production is too much, we have no allocation now,” an official from state-run power company, Tanesco, said.
The 2,115MW Julius Nyerere Hydropower Dam is said to be almost filled with water following heavy rains that started early this year.
Meanwhile, while the country has an installed capacity of 1,938MW and the grid installed capacity of 1,899MW, Nigeria which has an installed capacity of 13,000MW is struggling to electrify 85 per cent of its electricity consumers.
President Bola Tinubu has approved the appointment of Jim Ovia, renowned banker and businessman, as the Chairman, Board of the Nigerian Education Loan Fund.
Jim Ovia
Ovia’s appointment is contained in a State House statement titled, ‘President Tinubu appoints Jim Ovia as Chairman of the Nigerian Education Loan Fund,’ and issued on Friday by Ajuri Ngelale, special adviser to the President, Media & Publicity.
The statement noted that “Ovia is the founder of one of Nigeria’s leading banks and a respected business leader, with a surfeit of efforts and benefaction towards nurturing and empowering young Nigerians.
“He is an alumnus of Harvard Business School and holds a Master’s in Business Administration from the University of Louisiana.”
The National Student Loan Programme is a pivotal intervention that seeks to guarantee sustainable higher education and functional skill development for all Nigerian students and youths.
The Nigerian Education Loan Fund, the implementing institution of this innovation, demands excellence and Nigerians of the finest professional ilk to guide and manage.
“The President believes Mr. Ovia will bring his immense wealth of experience and professional stature to this role to advance the all-important vision of ensuring that no Nigerian student suffers a capricious end to their pursuit of higher education over a lack of funds,” the statement partly read.
Ovia’s appointment will also ensure “that Nigerian youths, irrespective of who they are, have access to higher education and skills that will make them productive members of society and core contributors to the knowledge-based global economy of this century.”
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