As inflation continues to affect the cost of living in Nigeria, financial experts are encouraging people to rethink how they save their money. Instead of keeping cash at home or relying solely on traditional savings methods, Nigerians are being advised to adopt structured and interest-earning financial options that can help protect and grow their money over time.
The Brand Manager of FairMoney Microfinance Bank, Osasikemwen Ighile, recently highlighted the risks associated with keeping money idle, especially during periods of economic uncertainty. According to him, inflation steadily reduces the value of cash, making it difficult for people to preserve their purchasing power if their money is not earning returns.
Nigeria has experienced significant inflationary pressures in recent years, with inflation reaching as high as 34.8 percent in late 2024. During such periods, money kept at home or outside formal financial institutions gradually loses value because prices of goods and services continue to rise while the amount of money remains unchanged.
Ighile explained that many people still rely on traditional saving methods such as keeping cash at home or participating in contribution schemes like ajo and esusu. While these systems promote financial discipline and community support, they have limitations in today’s economic environment.
One major challenge is that cash kept at home earns no interest. In addition, easy access to physical cash often leads to impulsive spending, making it harder for individuals to achieve long-term financial goals. As inflation rises, the value of such savings declines, reducing their ability to meet future needs.
Contribution schemes, although useful for short-term savings objectives, also have drawbacks. While they help members rotate funds among themselves, they generally do not generate additional returns. In other words, they help people save money but do not necessarily help their wealth grow.
To address these challenges, financial experts recommend using structured savings products such as fixed deposits and interest-bearing savings accounts. These options allow individuals to earn returns on their money while reducing the temptation to spend funds meant for future goals.
Ighile advised savers to separate their funds according to their needs. Money needed for emergencies should remain easily accessible, while funds meant for future expenses such as rent, school fees, business investments, or major purchases can be placed in savings products that offer interest.
He also emphasized the importance of automating savings contributions. By setting up automatic deposits into dedicated savings accounts, individuals can maintain consistency and avoid the uncertainty that often disrupts personal financial plans.
The growing presence of digital banking and technology-driven microfinance institutions has also made structured saving more accessible. Many financial platforms now allow customers to open accounts, save, and manage investments directly from their mobile phones.
Addressing concerns about safety, Ighile noted that regulated financial institutions operate under the supervision of the Central Bank of Nigeria and are protected by the Nigeria Deposit Insurance Corporation. These safeguards are designed to help protect customer deposits and build trust in the financial system.
Industry experts believe that as economic conditions continue to evolve, Nigerians will increasingly need to move beyond simply storing money and focus on strategies that allow their savings to grow. They argue that long-term financial security depends not only on how much money people earn but also on how effectively they manage and invest their resources.
Ultimately, structured savings and interest-bearing financial products are becoming essential tools for preserving wealth, achieving financial goals, and maintaining household stability in an inflationary economy.
