Economies of countries the world over experience challenges every now and then. Typically fluctuating between periods of strong and weak growth, known as Economic Cycles which are characterized by unique set of events. During an economic boom, there are high levels of economic growth. Consumer confidence is strong and consumers have a more positive outlook on the state of the economy. Conversely, during a recession, there is rising unemployment, a sharp decline in business confidence and profits. This eventually impacts negatively on Gross Domestic Product (GDP) leading to high levels of inflation, increased government borrowing and rising cost of living.

In 2011, Ghana was ranked the fastest growing economy in the world with a record high growth rate of 14% making us a Lower Middle Income Country. This was a period of Economic boom for Ghana. Today, based on the concept of economic cycles the same cannot be said as Ghana is now suffering a reversal of fortunes. Our economy has seen some challenges in recent years leading to all key economic indicators pointing downhill. According to The State of the Ghanaian Economy Report, – Institute of Statistical, Social and Economic Research, the cedi lost 40% of its value against the dollar in the first eight months of 2014 to become the world’s worst performing currency.  Inflation, which stood at 16.5% as at February 2015 was at a four year high, leading to rising public sector costs, increased government borrowing and weakening of the cedi compared to all our major currencies.

All this notwithstanding, a down economy can also present great money-making opportunities to those who prepare and are willing to take a chance at being successful. For any individual, the best way to successfully make money in a down economy is to take control of your own personal finances by developing smart financial habits. Some of the key principles worth considering and practicing in these challenging times include:

1. Setting up a Personal Monthly Budget

During an economic recess, one needs to be extra prudent when it comes to spending. In order to control ones spending habits, it is best to set up and stick to a personal monthly budget. This way, you know exactly how much money you have and how much you can afford to spend. When you realize you are spending more than you earn, you have to adjust your budget accordingly by cutting out things you can live without to save yourself some cash.

2. Open an Investment Account

Given the current state of the economy, it may seem scary to open an investment account. However, when it comes to investing, it’s better late than never. The magic of compound interest in investing, pays off huge returns in the long run. It is also very important to diversify your investment portfolio as different asset classes perform differently depending on the prevailing economy conditions. For both old and beginning investors, it is an ideal time to invest in the *“MoniMac” product and also consider the purchase of some good stocks as most share prices on the Ghana Stock Exchange have fallen.

3. Add Value to Yourself

It is an established fact that a lot of people get laid off during recessions. Thus to safeguard your job and avoid the unfortunate and painful process of getting laid off, you need to add value to yourself and make yourself indispensable within your organization. You can do this by specializing and getting certified as an expert in your field of work. Also, going over and above your scope of responsibilities within your organization can help you keep your job guaranteed even when the going gets tough. Furthermore, if you have any ideas that can help your company cut costs and save money (such as using recycled paper, turning off lights and all electrical gadgets after the close of work,etc), suggest them to management as employees who can problem-solve and help save money during tough times are usually retained.

4. Get Creative & Innovative

Hard times call for creative solutions. A down economy is the perfect time to use your talents and skills to earn extra income. It does not have to be a big business idea that requires a huge start-up capital you most likely do not have. If you enjoy things like baking, sewing, painting, playing a musical instrument, arranging flowers etc then you can engage in these activities as a side business to bring in some extra cash. For the corporate world, there is the need to strive for operational efficiencies in business by implementing some cost-cutting measures. For instance, working from home in cases of “dumsor” to save money on fuel and going out on the field to market your products when there is a lighter work schedule.

5. Selling Off Items You Do Not Need

Take a good look around your home and you will notice a good number of things you do not need or use anymore. If you do not use it, why not make a little money off it? Use e-commerce sites such as OLX and to sell off these items for some extra cash. Moreover, selling old household items you are not using is a great way to clear out your storage space while making some cash at the same time!

In a nutshell, following these principles will not only help you save and earn some money during these challenging economic times but it will also help you make some extra money to weather the storm. Try not to fall prey to all the negativity being projected about the state of the economy. Instead, stay focused on your goals and before you know it, you would have mastered the art of making money…even when the economy is down! Always remember, sometimes good things fall apart so better things can fall together.

*“MoniMac” is our flagship short-to-medium term Investment product, with very attractive returns far above Treasury bills. Please call for more details.

By: Nana Osae Addo-Dankwa (C.E.O) & Gifty Oye Adjei (Investment Analyst)


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