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How to deal with inflation and better manage the household budget

How to deal with inflation and better manage the household budget

Inflation occurs when the price of goods and services rise. It may influence items on your list of essential spending, such as food, clothes, and petrol, and have a significant impact on your financial situation in the long run.

As such, it is crucial to know what steps you can take to cope with inflation and avoid relying on credit cards and collecting debts.

In this article, you will learn several valuable budgeting tips to help you beat inflation. They range from lowering unnecessary expenses, setting your priorities, and following a spending plan to looking for affordable or free alternatives, generating extra income sources, and changing your lifestyle.

Continue reading to learn how to stay within your budget even considering inflation.

Consider paying off your debt with a personal loan

When you are struggling to pay off your debts, it is easy to panic. However, the best approach is to take some time to evaluate your situation and consider all alternatives before making a decision.

If you have a stable job and a secure source of income, you might want to think about applying for a personal loan to help pay off your debt.

You can choose from many lenders on the market, such as SocietyOne, or contact banks and credit unions.

The amount of money you can borrow will depend on your needs and should not exceed 30 per cent of your monthly income.

In the long run, you will be able to eliminate your debt, lower your monthly payments, and improve your credit score.

You can also try other debt relief methods, such as debt consolidation, but this depends on the type of debt you have and your personal financial situation.

In any case, make sure that you compare debt relief options before making the final decision to ensure that it’s truly the best debt solution for you.

Prioritise your essential spending

The next thing you should do when you feel the need to cut down on your expenses is to make a list of essentials.

Prioritise these items on your list by assigning them points according to the number of times you need them on a daily basis.

The more frequently an item appears on your ‘must-have’ list, the more points you assign to it.

For example, if your most important spending is food and your phone bill, you may assign five points to food and two points to your monthly phone bill. The larger the number of points is, the higher priority that spending gets.

You may choose to set aside some money for infrequent but essential spending, such as travel or medical care. However, try not to overspend on these items.

Make a list of unnecessary expenses

Now that you know what your most essential spending categories are, start looking for items that can be eliminated or reduced without causing significant problems in your life.

It may include, for example, subscriptions to magazines, newspapers, or newsletters you don’t read often enough. You can also buy cheaper household products, start using public transport, or combine some activities into one trip to save on gas.

When you have already made a list of unnecessary expenses, think about how much money you could save per month if you stopped spending on these things altogether.

This way, you will have a clear picture of how much money you can save with simple changes in your lifestyle.

Create a spending plan

Although it is crucial to stick to your budget even during periods of inflation, you can still plan your expenses and make improvements to how you use your money.

To do this, you will need to make a spending plan for each month. Here’s how you can do it:

  • List all of your essential spending items (even if they seem obvious)
  • Estimate your total monthly income
  • List all of your unnecessary expenses
  • Total the amount you would save if you stopped spending on unnecessary items
  • Subtract the amount you save from your income
  • What is left is the amount of money you can spend per month
  • Divide the money by the number of weeks in a month.

Doing this will tell you how much you can spend on each week of the month.

Your spending plan should also contain some free cash, which you can use for unplanned situations, such as a broken appliance.

You can also use these funds to save up for larger purchases, such as a new television or a vacation.

However, if you find that you can’t stick to your spending plan, don’t be discouraged. Instead, try to lower your expenses more and save up some extra money to pay off your debt. You can also look for a second job to make extra money.

How to make the most of your money on any budget

Shop around to find affordable alternatives

When shopping for food, clothes, or household items, it’s always a good idea to look around and compare prices before making a purchase.

In this way, you will find out where you can save money and where you need to pay more to get quality products.

Several ways to save money include:

  • Buying groceries from discount supermarkets
  • Buying clothes from second-hand shops or online auction websites
  • Buying basic appliances and household items from department stores or online stores that provide bigger discounts than local stores, and those that offer used appliances
  • Buying food from local farmers’ markets or organic markets. This way, you will help local farmers and eat healthier food. You will also be able to avoid genetically modified foods and harmful chemicals.

Generate extra income sources

If possible, try to generate extra income sources.

This solution may include selling unwanted things from around the house, starting a home business, doing a side hustle, or taking on a freelance job.

For example, you could become an expert seller at eBay or Amazon, get hired as an Uber driver, or buy low-cost items at garage sales and resell them for higher prices on eBay or Etsy.

The possibilities are endless — just take some time to brainstorm and choose the options that are best suited to your needs.

Change your lifestyle

Sometimes, you don’t need to make drastic changes but simply tweak some things in your daily life to save money.

For example, you can try cooking at home more often, avoid coffee shops, and purchase cheaper foods, such as frozen veggies or fruits. This way, you will spend less on groceries while still eating healthy food.

Save money without compromising quality of life

Although inflation is not something you can avoid, you can still manage your finances better.

By using practical budgeting tips and following a spending plan, you can stay within your budget even during periods of inflation.

You can also generate extra income sources to help pay off your debt and save up for larger purchases.

The key to balancing your finances during inflation is to always look for ways to save money without compromising the quality of your life.

For example, if you are looking for affordable alternatives, you can sometimes allow yourself to spend a little bit more on quality products that will last longer and save you money in the long run.

In this way, you will be able to balance your budget and stay within your spending plan even when prices go up.