Inflation-Proof Your Budget: 12 Simple Strategies to Keep More Cash in Your Pocket
If you look at inflation figures, you’ll realize they fluctuate significantly. For instance, in June 2022, the inflation rate shot up to 9.06%, although it currently hovers around 3.00% – 3.50% depending on the source.
While this may seem like good news, it’s not ideal. Moderate inflation reduces the value of your dollar and, hence, your purchasing power. Thankfully, with some planning and discipline, you can wade through rising costs like a pro.
To help you find ways to manage increasing prices, we’ve compiled a list of 12 smart strategies to beat inflation and get more bang for the buck. See if you don’t agree that following these strategies can put money back into your pocket.
Ask for a Raise
This may seem like a no-brainer, but many people hesitate to ask for a raise. If you are a productive employee with positive appraisals, your current employer will likely agree to enhance your paycheck to retain you. Moreover, nobody knows about rising costs more than business owners and corporations.
Nevertheless, it is essential to remember that you don’t ask too much. You must calculate how much money you are forced to spend due to inflation and estimate the resulting deficit based on your current salary. Instead of demanding a specific number, negotiate for a salary range. This allows your employer to think twice before denying your request.
Get Rid of Liabilities
Most people associate liabilities with credit cards and loans, but other things can drain your resources, too. These include legal risks and obligations such as paying taxes and fines. Having a plan to address these risks and obligations will save you a lot of headaches.
Moreover, it is well-known in insurance circles that people make claims and file lawsuits when inflation occurs. So, to avoid possible lawsuits when economic conditions worsen, speak to a financial advisor who can help you identify current and long-term liabilities.
Most of us ignore other kinds of liabilities. For example, if you have an old car that uses a lot of gas, get rid of it immediately. In the same breath, you may want to hang out with certain friends less often if they consistently don’t share the bill after a lovely brunch.
Adopt Minimalism
Minimalism started as an art movement in the 1960s. It promoted simplicity, reductionism, and the idea that “less is more.” Famous minimalist artists include Frank Stella and Donald Judd.
Minimalism is also a philosophical concept that teaches you to retain what is truly essential and meaningful and discard what’s unnecessary. You’ll realize that many things in your life are not required. Living a simple life gives you the freedom to spend less on things that keep getting more expensive.
Embrace a Sustainable Lifestyle
Once you adopt a minimalist lifestyle, you can also embrace sustainability. The United Nations Environment Programme (UNEP) describes sustainable living as a collection of lifestyle choices we all must make to help make our planet better. This includes choosing products based on price, accessibility, and environment-friendliness. Try to acquaint yourself with sustainable living by following blogs and listening to podcasts informing you of the basics. TreeHugger, EcoWatch, and Inhabitat are good examples.
Are you wondering how sustainability helps you combat inflation? Turning off lights when they’re not needed dramatically reduces energy bills. Similarly, you can buy products that last a long time instead of what seems affordable now. Although sustainable products are expensive, they are durable and reduce your expenses in the long term.
Learn to Substitute
Brand loyalty is not your best friend when prices shoot up constantly. If you are used to certain pricey brands, you can begin to substitute them with products sold by more affordable ones. You can also substitute food products by choosing what is available seasonally.
For example, buy apples when they’re in season, and don’t go looking for mangoes when they are expensive. When you visit the supermarket, look closely at the price tag and pick from a brand that is priced well below what you usually buy. Avoid products with fancy packaging and choose from warehouse stores instead.
Use Public Transportation
Although transportation services cost more than they did a couple of years ago, the price of gasoline and used vehicles has dropped. This means you can invest in a used car instead of spending money on a brand-new car.
Please remember that the cost of gas fluctuates often, especially with all the current geopolitical crises. Hence, if possible, you can ditch the car altogether if you live in a city blessed with decent public transportation. It may require walking a certain distance to the bus stop or subway station, but that’s good for your health anyway.
Wait for Clearance Sales
It wouldn’t be an exaggeration to state that both men and women spend a lot of money on clothes and accessories. However, choosing classic style over fleeting trends can help you brace yourself against rising fashion costs.
Educate yourself regarding different types of fabric and classic styles. Choose sustainable and durable fabric from noteworthy brands, but wait until they announce their clearance sales. Not only will you get something that remains in style for a long time, but with good care, it will last for more than a few years.
Don’t Shy Away From Second-Hand Products
Inflation has been fuelling the trend of re-commerce worldwide. Recommerce, or the sale and purchase of used goods, is projected to grow 16 times faster than the sales of brand-new retail products.
You can buy used products, from appliances and clothes to furniture and vehicles, at a fraction of the original cost. Unfortunately, many people shy away from purchasing used products due to the stigma attached to them. If you overcome it, you’ll realize that it helps you save a lot of money.
Shop in Bulk
Bulk shopping is an effective strategy for saving money. It is also useful when costs are rising. You can purchase products that will be expensive in the future in advance, tackling inflation head-on. However, this strategy only works with certain kinds of products and if you have enough storage space in your house. Try stores like Costco and Amazon for good bulk deals.
Identify products that you consume regularly and make a list of those that are not perishable. When you visit the supermarket, try to buy them in bulk as they tend to be more economically priced.
Upskill Yourself
Think of gaining a new skill as an investment that will pay dividends. It may cost money to acquire a new skill, and you will probably not see the results immediately. However, upskilling yourself is a tried-and-tested strategy to find better jobs or gain a promotion. This will help you take up side gigs, start a new business, or apply for a better-paying job. All these will help you deal with inflation without lowering your living standards.
Make Wise Investments
Nothing is more important than knowing how to invest in the right things. Not only does this help you beat inflation, but it also builds generational wealth. Some of the time-tested investment choices include stocks, real estate, and gold.
In addition, you can purchase Treasury Inflation-Protected Securities (TIPs). TIPS are a type of inflation-proof US Treasury bond. The only risk is that if there’s deflation, the value of the bond depreciates as well. Another option is to invest in commodities such as copper and other metals, which tend to increase in value alongside inflation rates.
Plan Your Retirement
Inflation’s long-term effects can be disastrous if you don’t consider it in your retirement strategy. Social security benefits are inflation-proof, but your IRAs and 401(k)s are not. Pensions fall under a gray area. Hence, you can’t entirely depend on them. Diversifying your revenue streams and making investment choices relatively unaffected by inflation is essential.
Inflation or not, you must start planning for retirement early in life. This helps you become more accountable and manage your finances responsibly.
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