This weekend, I filmed a requested video by one of my friends, and I pondered on what the approach should be.
The request was to share some tips that will help people navigate the impact of the fuel price increases that Namibians have experienced over the last few months.
With inflation in Namibia at 6% at the end of June, we know fuel is not the only pressure consumers are facing.
Considering all this, how are you dealing with the shortfall being created by the stagnant income level amidst the increasing costs of living?
All else being equal, if you were living on a tight budget, unless you had an increase in income over the past few months, the rise in your expenses have created a shortfall in your budget.
The question I would like you to ponder on as you go about your day-to-day activities is, what are you cutting off to accommodate the increasing costs?
Whatever your answer is to the above, here are some things that you should avoid in your attempt to survive these tough times:
- Deferring your overdue car service – for many people with cars that are off maintenance plans, the idea of not paying that lump sum to get your car service might sound like a good alternative, however, you are compromising on fuel efficiency in the short run as well as running into even costly problems in the future. Just pay for it.
- Cancelling your insurance – this ranges from medical cover to life and short-term insurance. If times are tough, rather explore if your insurer can perhaps offer a payment holiday or perhaps downgrade to a more affordable option instead of cancelling in totality.
- Disposing of your investments because the market is dipping, and your investment has depreciated – the rule of thumb is to buy when the price is low and sell when the price is high. You will be surprised that with a little bit of patience, the market is likely to correct itself and the price will recover.
- Dipping into your savings to make up for the shortfall in your budget.
- Taking on new unproductive debt amidst rising interest rates – If you are contemplating a purchasing decision that is not urgent, rather defer that so that you can see how things go before committing.
The current inflationary pressure is affecting many countries across the globe and things are predicted to get worse before they can get better. Therefore, the earlier you can start re-arranging your finances to cope with the current decrease in the purchasing power of your income, the better prepared you will be if things really do take a turn for the worst.
For more, check out our YouTube channel Money matters with Budget Bee- Namibian Youtuber to learn more on the subject.
*Klestina Kauhondamwa is a Chartered Accountant by profession
