The cost of living continues to rise, and many are feeling the pinch. However, there are ways to navigate and adapt to this challenging financial landscape.
If you’re looking for practical solutions and workarounds to help you tackle higher inflation head-on, then this article is a good starting point.
1. Leverage the labour market.
With labour shortages prevalent in certain industries and specialisations, it’s an opportune time to negotiate a wage increase, explore better-paying job opportunities or even get a side gig.
Strengthen your bargaining power by emphasising your value in the current job market. If you can, work on improving yourself professionally through upskilling, reskilling, taking free online courses or getting certified (if this is applicable to your job).
2. Be on the alert for bill increases.
Keep a watchful eye on price hikes in areas like groceries, mortgages, and utilities. Be vigilant and seek better deals to combat rising costs.
Practise your research and analytical skills to find better options without sacrificing quality.
3. Make some lifestyle changes.
Carve out your own financial path by making adjustments in various aspects of your life, including:
- Car costs: Opt for a smaller, fuel-efficient vehicle, combine errands, use public transport, walk or cycle, and compare fuel prices before filling up.
- Food: Be selective about your grocery purchases by choosing items that haven’t undergone significant price increases. Optimise your grocery spending by adopting smart shopping strategies. Shop only for what you need and avoid impulse buys.
- Rent: Consider moving to a more affordable area or property, sharing living spaces, or negotiating a smaller rent increase with your landlord if you’ve been a reliable or long-term tenant.
- Mortgage: Shop around for competitive mortgage rates and stay informed about what constitutes a good rate for your loan.
4. Deal with debt.
When dealing with debt amidst higher inflation, you can choose between two approaches:
- Take on debt to diversify or increase investments: With inflation eroding the real value of debt and assets increasing over time, this approach may be more profitable in the long run. Keep in mind that asset prices may fluctuate in the short term, and hoarding cash can be detrimental during high inflation. Instead, focus on investing in assets that provide a hedge against inflation, like real estate and businesses.
- Pay off debt to lower risk and improve stability: By paying down debt during higher interest rate periods, you lock in a higher return on your money and eliminate the risk of interest rates affecting your cash flow. This strategy is particularly beneficial for those nearing retirement or semi-retirement.
Ride the higher-inflation tide
Time and again, everyone has had to deal with rising inflation, so it’s definitely not the end of the world.
Most people will adapt and survive if they haven’t built their lives on excessive consumerism and unrealistic financial expectations. Wages will probably catch up to inflation over time, as they have historically.
So, use this time as an opportunity to flex your frugality muscles. By shopping around, tweaking your spending habits, improving your income, and enjoying low-cost activities, you’ll emerge personally and financially stronger on the other side.
If this article has inspired you to think about your own unique situation and, more importantly, what you, your family or your business are going through right now, please contact your advice professional.
This information does not take into account the objectives, financial needs or legal situation of any person or business. Before making a decision, you should consider whether it is appropriate in light of your particular objectives. Our news articles contain general information about a variety of topics for your enjoyment. They are of a general nature only and aimed to get you thinking about newsworthy topics. This information is not a substitute for specific legal, financial, insurance or accounting advice.