Everyone expects the cost of living, goods, and services to increase over time. However, it can take you by surprise when it happens at an exponential rate. When your income lessens or remains the same, high inflation rates can cause an undue amount of financial hardship and stress. The rising cost of everyday expenses can result in smaller budgets, higher debt, and stress.
Unfortunately, there’s not much anyone can do to change the skyrocketing prices of goods and services. The only thing you can do is invest in stronger financial management practices to help weather the storm.
Here are a few suggestions to help do just that.
Adjust Your Budget
Knowing where your money is going is essential during economically challenging times. Creating and maintaining a realistic budget is the most efficient way to monitor your cash flow. When times get difficult, review your budget and make adjustments as needed. Ask yourself questions like whether you’re spending too frivolously or if there are bills and expenses you can do without until things get better.
You may learn that you’re spending too much on morning coffees and lunch with your co-workers. Or, instead of paying for home internet services, you can use your mobile phone’s wi-fi hotspot to save money.
While adjusting your budget may require reviewing multiple accounts, bills, and receipts, having an account with a bank like ONE can make that process easier. Pockets (sub-accounts) can be customized to automatically schedule transfers for your bills and expenses (i.e., $50 for the water bill, $150 for groceries, $200 for insurance, etc.). With Pockets you have a clearer picture of where your money is going each month and can make more informed purchasing and spending decisions.
Use Credit Sparingly
The inflation crisis has caused many people to rely on credit cards to survive. While credit cards can be a temporary lifeline, taking on too much debt can only cause more financial stress. Every time you use your credit card, you agree to repay the transaction amount as well as interest and any associated fees. If you don’t repay the balance within 30 days, the interest and fees accrue, and your debt increases.
During challenging times, a great rule of thumb is to use credit sparingly. Before using your credit card, ask yourself if the expense is necessary. You should also consider how long it will take you to pay the balance off. If it’s not something you need and you can’t repay the amount used within the next month, you shouldn’t make the purchase.
Always Look For Ways To Save
Saving money provides financial security and improves your overall quality of life. It is also a fundamental practice to survive skyrocketing inflation rates. No matter what you’re trying to purchase, you should always look for opportunities to save money. Whether it’s a few pennies or several hundred dollars, it can go a long way to helping you survive when you’re low on cash.
Use coupons and take advantage of promotional offers when buying products and services. Find ways to conserve resources and cut back on bad habits that push you further into debt. That includes the things you need like housing, utilities, groceries, health insurance, etc. For instance, implementing green practices in your everyday life can save you money on your energy bill. Similarly, bundling your car, home, and life insurance can reduce your monthly premium.
The idea is to look at all the ways you’re spending your money and find ways to spend less without sacrificing your happiness or wellbeing.
High inflation rates affect the economies of countries worldwide. The most efficient way to survive inflation is to learn key financial management concepts and apply them to your everyday life. Adjusting your budget, using credit sparingly, and finding ways to consistently save can improve your cash flow and ensure that you have the means to afford what you need, despite economic statuses