Many young people in Port Harcourt are increasingly struggling to cover the rising costs of basic living expenses, some battling month-to-month to make ends meet.
The cost of rent, food, bills, medicals, cars and related care, cellphone credits, and student school fees all add up very quickly. Never mind the odd extravagance.
But life happens. Unexpected costs crop up all the time, like if your fridge deciding it can’t be chill anymore, or your pet making this the month it needs to go to the vet. These inevitabilities end up dipping into the overdraft facility .
“From personal experience, getting by with rent is all right, but when things go wrong –those things put you in quite the scrap, and it means you start behind the next month,” says Amaka Uchenna, a 23-year-old teacher in Port Harcourt.
And that’s just taking basic living expenses and the occasional “life happens” emergency expenses into account. It’s seemingly impossible to get on the property ladder in your 20s or 30s in Port Harcourt. All the while financial advisors will tell you that you should, ideally, be saving for retirement from your 20s if you want any chance of financial freedom when you’re older.
Millennials doing things differently
What happened to putting at least one-third of your monthly income into savings, as many Baby Boomers recommend? These days the 50/30/20 rule is more popular, when achievable. This budgeting method advises that you should allocate half of your monthly income to living expenses, 30% on entertainment, dining out and other lifestyle expenses, and the final 20% should be put towards debt payments and saving for the future.
According to a report by Standard Cruze, however, this is not how all millennials are choosing to save, with many less concerned with saving for retirement than they are with saving to live the lifestyle they want now.
“Young adults tell us they are willing to do whatever it takes to achieve freedom and flexibility, even if it means working for the rest of their lives,” says Onyeka Baldmus, Head of Standard Cruze.
They are, according to the report, more likely to spend money on travel, dining, and fitness than on saving for their financial future.
37-years-old, moving in with mom
In Port Harcourt, financial freedom might seem like a distant, and perhaps even foreign idea with living expenses and salaries as they are. This is driving many millennials either back to the family home or into increased debt if they aren’t able to seek other financial assistance.
“I’m 37. I basically moved back in with my mom because rent is so high and it saves us both a load of money,” says Chizindu Amadi, a graphic designer based in Choba.
Jonathan Nwizu, Financial Director at Tellmoney, weighs in: “The situation needs to be considered as a matter of urgency and practical solutions need to be found – now! Above and beyond the usual living expenses, 2018 has seen a massive rise in the cost of petrol, while VAT increased and inflation to 15% in April. It sounds like just two things, but both of these have an impact on every single PH based business, and therefore impact the cost of absolutely everything we consume. And yet incomes are not rising adequately to keep up with these consistently rising costs.
“This is one of the reasons that we have created a rent-to-own model. Most people, especially the young, cannot afford to buy brand new furniture and appliances. This is a solution that enables them to afford the necessary basic items without having to get into debt.”
Bad news for salary hikes
According to Nwizu, it is essential to create product models that give consumers greater opportunities for access.
“Companies offering services need to get creative. We need solutions to make products more widely available. There is little point in having a product available for sale if only a small percentage of the population can afford to buy it,” says Nwizu.
Salaries for PH based employees are expected to rise on average by 1% in 2018, according to the 2018 Compensation Best Practices Report by American company PayScale, which surveyed a number of Rivers State companies. The vast majority of organisations surveyed, about 84%, indicated that they plan to give base pay increases this year. However, salary increases rarely keep pace with inflation (which currently sits at 15%).
For consumers – millennial or otherwise – want to avoid falling (further) into a debt spiral, now is the time for some very tough decisions.