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Managing your finances in difficult times




As we grapple with the effects of the COVID-19 pandemic Nigerians are suddenly faced with its economic reality. What began as a health challenge has become a major destabilizing economic and financial problem as the country faces lockdown. All the plans and hopes government, businesses, and individuals had at the beginning of the years have virtually disappeared, replaced by fears, anxieties, and trepidations. Our lives and living conditions now depend on the outcome of the COVID-19 war.

When the market collapses as we have there is two evil to watch: monopolistic pricing when is already evident with the spike in prices of staple food items following the lockdown and what is referred to as the Keynesian “thrift paradox”, which is the propensity or disposition of most people to hold on to the little cash or resources they have because of the uncertain. So spending is naturally constrained.

In times like this, when cash flow is no longer predictable and assured, the challenge of managing finances becomes tasking. Government has already cut its 2020 budget of N10 trillion by 20 per cent given the emerging financial realities; corporate bodies such as banks are also reviewing revenue and profit projections for the year. So, as individuals, this is the time to put the surgical knife to our financial plans, especially the spending part, to cut off every ‘excess fat’ that does not guarantee sustainable living, because expected income may not materialize.

As companies and governments are cutting down on revenues, workers are also expected to bear part of financial brunt through pay cuts, which will inevitably affect their standard of living. So we need to make new financial plans to cope with the new situation; otherwise, we may be caught unprepared and exposed to the vagaries of this new challenge.

Although government and businesses are cutting projections, these are still estimates and forecasts, which may even be too optimistic, given the fact that we are not at the end of the pandemic yet and its full implications and ramifications are still unknown. The full costs and effects can only be truly determined at the end of the day which no one, for now, can say.

The IMF estimates that global economic growth may slow by over 2 per cent as a result of this, from the previously expected the rate of 4 per cent growth, which may look too promising by the current prospects. Just last week, McKinsey Consulting, issued a report on Nigeria stressing the country is going into a recession of about -3 per cent, which is far worse than the 2016 and 2009 recessions at -1.8 and -1.6 per cent respectively.  The EuroAsia Group projects that Nigeria will lose about $15.4 billion in oil revenue this year. This will be catastrophic.

Managing money or personal finance is a subject virtually everybody is an expert but as Jesus said, wisdom is known by its children. It is not a simple subject because it is not about knowing it but what we do about it. It requires a great deal of discipline, sacrifice and foresight; which explains why most people make common financial mistakes.

However, if making such decisions is challenging in normal times when everything seems in order – incomes are predictable and expenditures can be determined – it is daunting in difficult times when life and living are uncertain. This is when financial planning is doubly necessary and indispensable because cash is always the king but in hard times it is simply a god. So the little in your hand can amount to so much if you maximize it; as they say, a bird at hand is worth more two in the bush.

Making decisions that touch on how we spend money in difficult times, such as we have now, is critically important, because it will affect everything about our life and family – feeding, transportation, school fees, rent, travels etc. To avoid sudden unpleasant consequences, this is the time to reappraise your financial plans for the year to ensure that you are not stranded midway. This is not the time to be frivolous and financially reckless or even stupid. Every penny in your hand now counts.


For most Nigerians, who have experienced the act of national budgets since the late 1970s, it is simply a document that has no relevance to reality. And they would not be entirely mistaken. Year after year, the great effort had gone into preparing the national budget only for it to be disregarded in the process of implementation. As such, budgeting has become a financial ritual that is undertaken to fulfill all righteousness without any impact on society; which is a tragedy.

The sad thing about this development is that we have trivialized the importance of budgeting, which will adversely affect the psyche of the people. Secondly, most people would have lost confidence in the essence of budgeting both at the national and personal levels.

It is, therefore, of little wonder that most people do not bother with budgeting in their financial decisions. Such people may be pardoned given our experience with budgets in this country, but that does not save them from its consequences. Anybody who does not practice the act of budgeting should be worried because it is too dangerous a risk to take; in other words, budgeting is the most important process in taking a good and effective financial decision, because it is an act of discipline.

Yet, there is a psychology for the action. The human brain cannot always process all the information at its disposal at the time. It is always focused on present information and requires little time to adjust such information and balance it with previous ones already stored in our memory. That is the reason why we forget things. Forgetting something does not mean that it has been erased from our brain. Rather, we forget, because our brain was unable to retrieve and act on information already stored up, perhaps due to the pressure and/or focus on the present circumstance.

Here then lies the danger; most expenditure decisions are made on the spur of the moment, because of the impact of immediate information on our brain, allowing us little or no time to process the information concerning our previous financial resolutions and decisions. This is the conflict that has impoverished most people; while our brain needs time to process and rationalize our decisions we get impulsively involved in spending money, which leaves us worse off. Unless you are guided by something that constantly remains you (brain) of previous decisions regarding expenditure, you will be at the mercy of the market.


To summarise the salient points; first, you must realize that making financial decisions is essentially about taking responsibility for your future and those of your children.. Unless we live every day guided by that consciousness, we are bound to make serious financial mistakes.

Second, you must realize that there are more things to buy than we can ever afford; even millionaires face this same challenge. So making financial decisions must of necessity bear this in mind. What this entails is that you must prioritize your financial needs and defer or postpone buying certain things that are not of immediate necessity.

Most people don’t realize that every economy is constantly going through cycles of ups and downs and only those who prepare and anticipate such changes can, not only guard against their negative effects but also take full advantage of their opportunities. In other words, every change situation creates problems for some and opportunities for others.

It is, therefore, your responsibility to minimize one and maximize the other, and unless you are financially prepared by anticipating such changes, you will never take full advantage of its opportunities, because the opportunity is a constant feature of life but it only comes to those who wait for it. So be on the look-out for profitable and bargain investments that can improve your future income or cash flow even in these difficult times. But avoid conventional and fanciful investments that have no immediate or short term prospects.


You write down the things in the budget to commit yourself to it and ensure regular reviews. An unwritten budget does make much sense in this circumstance; because the essence is to check yourself and ensure that you don’t misspend. It is essential for prioritization and the proper allocation of available resources. Focus on the very necessities and essentials to avoid misallocations. Some things may be urgent but not important, ignore them; focus on the important ones such as food, school fees, transportation, health – things of immediate impact and significance.

Things that can be deferred, negotiated or paid instrumentally, such as rent, loans or debts should be explored. You can also change the mode of transportation from personal vehicle to the public if it will cut down cost. Otherwise, you can use it for partial commercial purpose to at least cover the cost of fueling it to and from work. This is not the time to make a big man or car owner.

Put every plan for capital projects on hold for now; it is not a necessity and can wait. Everything has its time. This may not be the right time for it. Concentrate only on things that can give you extra income. Adjust your family menu and focus on utility items rather than prestige and taste. Abandon the habit of eating outside to conserve your resources and cash; a plate of food outside can serve a few members of the family.

Cut down on self-imposed costs such as cable television and telephone subscriptions, power generation, entertainments, social engagements and commitments such as weddings, burials, clubs, associations, church etc if they don’t directly improve your finances. Before or after making these decisions, hold a family conference to outline and discuss the unfolding situation to get everybody’s buy-in; this is the only way to prevent a backlash or opposition; and smooth survival.

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