Inflation, in plain terms, is the increase in commodity prices over a period of time. Today, the ever-increasing prices of commodities like food, gas, and housing continue to be a source of stress for many consumers. That’s despite projections by the IMF indicating that the global inflation rate could fall by 4.2% in 2025.
However, the increasing inflation doesn’t have to reduce your spending power. There are several strategic measures you can take to avoid overstraining your budget. Discover how to deal with this inevitable situation, whether you’re an individual or a business owner.
Have a Strict Budget
The first step towards mitigating the rising costs of products and services these days is having a strict budget. Doing this provides you with a clear financial roadmap for tracking your spending and cutting unnecessary expenses. Budgeting for your money lets you identify high-priority expenditures and cut back on less critical areas.
Contactless payments have become the new standard for transactions these days. In fact, you don’t need a credit card or bank account to make payments online. However, do you know how much you’re tapping away in monthly online transactions? That’s why having a clear budget to guide your spending in this new era of digital payments is vital.
Here are a few budgeting tips to keep in mind:
- Create a budget before the month or the week begins.
- Set budgeting goals together with your family or business team.
- Start your budget by covering high-priority expenditures.
- Overestimate your budget to avoid straining your wallet.
- Automate payments to keep everything more organized.
Shop Around for the Best Prices
Discounts and deals should be your allies against inflation. According to Snipp, 36% of shoppers in the US switched to dollar discount stores for better prices. Do your research and switch to business brands that offer frequent discounted prices. Find out if the store has occasional discounts for essentials like meat, eggs, and other items. This can save you money if you’re a frequent shopper.
As mentioned earlier, online subscriptions can also strain your pocket in this high-inflation era. So, instead of eliminating options like movies, music, and VPN, shop for services with the best prices without compromising quality. The same applies to online gamers. You can play at $1 deposit casinos instead of choosing a $20 or $50 deposit site. It’s all about saving more to beat inflation.
Use High Interest Rate Savings Account
Always ensure your cash savings get the highest interest rates to navigate inflation. The secret here is that high-interest-rate savings can beat inflation if the interest rate is higher than the inflation rate. Inflation, as we know it, can erode savings. Conversely, an account that pays a higher rate can increase the value of your savings over time.
Meanwhile, when choosing a savings account, compare multiple options and their interest rates. You can discover that some banking solutions offer higher interest rates than the current inflation rate. In addition, you can consider fixed-term accounts because they often offer friendly rates. Moreover, online banks can offer higher interest rates than the traditional high-street banks.
Leverage Modern Technology
Take note of this point, especially if you’re a business owner. We know that inflation and high operational costs are some of the reasons why most businesses close shop. Fortunately, the latest technology can help entrepreneurs reduce operating costs and increase revenue. A report by McKinsey reveals that digitalization of business processes can reduce costs by up to 90%.
For instance, AI’s automation is sweeping across the business landscape, offering cost reduction and efficiency benefits. This technology can automate repetitive tasks like data entry and research, reducing costly downtime. AI agents in customer support are also helping organizations reduce the need for large support staff. So, don’t ignore the tech benefits in business.
Pay Down High-Interest Debts
Central banks worldwide have been raising interest rates to combat rising inflation. Sadly, these increased rates can make it costlier for individuals and businesses to borrow money. Even worse, higher interest rates can make servicing existing debts even more expensive. Most individuals suffer the consequences of rate hikes on their credit cards.
To avoid the extra baggage, pay off your credit card debt and other variable-rate loans as soon as possible. You can go for a consolidated loan for bigger credits with longer repayment periods. Put simply, you can take a new loan to service an existing one. When you consolidate a loan, the debt amount remains the same. However, you can get more favourable terms after repaying your older loan.
Conclusion
These proactive measures can help you prepare for an uncertain financial future. While inflation can be difficult to navigate, setting a strict periodical budget usually works. You can supplement that by shopping for the best deals and discounts. Remember, the cost of commodities and services keeps increasing. Therefore, ensure your savings grow with the ballooning prices. Be a savvy consumer and strategic investor!
