Just when the world thought that Covid-19 was over and took an exhilarating sigh of relief, it got stuck right in the face with another, more powerful issue: INFLATION!
In simple terms, inflation refers to the spike in prices of goods/services resulting from an increase in their demand and decrease in their supply, or vice versa. The post-pandemic world is complicated, especially because it's experiencing imbalance on both sides of the spectrum. The result, obviously, is surging inflation!
Every single person who has experienced the pandemic has been affected by inflation. From groceries and cosmetics to real estate and everything in between, the prices have increased many folds, with little to no increment in wages. Now a very critical question arises, which I'm sure you also find yourself wondering about in hours of serious contemplation: if my earnings are the same but my expenses are continuously increasing, how do I manage it? How do I level this gap between my earnings and spending? Worry not, for we're here to give you 5 super useful, practically applicable financial management tips to tackle inflation!
So, without much ado, let's dive straight into it!!
1. Start Budgeting!
If you've never been in the practice of budgeting (planning) your finances, now is the perfect time to do so!! One of the major reasons why we run out of money before the month ends is we never plan our spendings ahead of time, and trust me, you'll be amazed to see the amount of savings you're capable of making once you get into the practice of making a budget! And it's no rocket science. All you've to do is make a list of all the spending you plan to do for the entire month. Make a list, divide it into sections (for instance, grocery, education, utility bills, etc.) and appropriate subsections and allot a certain amount of money to each section and subsection and stick to the allotted amount RELIGIOUSLY! 2. Cut Down Costs
While making a budget will definitely help you plan and manage your finances efficiently, it alone won't help you fully manage your spending. In order to fully (read: intelligently) tackle your finances during inflation, you need to take a few cost-cutting measures. This may include shifting from popular and pricy branded food/clothes to not-so-popular brands providing similar quality, canceling unnecessary subscriptions, etc. Remember, the only way to preserve your financial balance at any time, be it inflation or not, is to think rationally rather than emotionally!
3. Stay clean of debts (and doubts)!
If you've got any sort of debt, be it small or big, you've got to make it a priority to pay it off NOW! And there's a very rational reason for it (remember we've to be rational and not emotional, right?): you CAN'T yield any benefit from investments if you've existing debts on you! Many people think about making investments during inflation, which is a great idea, but the bad news is you can't make profitable investments without paying off your existing debts. So your most important priority after your living expenses should be to pay off your debts immediately. 4. Save For Emergencies
During inflation, many people who don't budget their finances usually end up living hand-to-mouth, which is to say that they spend all their earnings as they come. No savings at all. Why is this a major issue? Besides making a budget, which we've already discussed above, it's very crucial to put aside money every month in case any emergency occurs. Urgent financial challenges may leave you in a debilitating mental and financial stress if you've no savings, but if you do, voila, you're all worry-less! 5. Invest!
Now, considering that you're all sorted with budgeting, cost-cutting, debt-paying, and saving, now comes the time for investing! Investments, especially inflation-friendly investments, are always a great tactic to make passive income. And that's what you should do too: make inflation-friendly investments! This may include investing in your property, purchasing bonds, investing in the stock market, etc. These investments are inflation friendly in that they keep pace with inflation and don't tend to put you at risk of losing money.
Final Word
Inflation is undoubtedly an evil that's taxing every individual in the post covid world, but it can be tackled if you learn to manage your money intelligently.
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