How to Manage Your Spending Habits During Inflation

Photo by Karolina Grabowska

Once upon a time, you could go to the store with a few currency notes and return with three bags of groceries, but that is not the case anymore. With the recent hike in the prices of everything, you would count yourself lucky if you can to buy everything you have on your grocery list without running yourself into debt. The condition just described above could best be referred to as inflation

The Oxford dictionary refers to the economic term as a general increase in prices and a fall in the purchasing value of money. In layman’s terms, it means that you as a consumer can buy less for more money, and it is as scary as it sounds, especially if you consider that it was already difficult to purchase anything.

The effects of inflation exceed purchasing power; it cripples every sector of the economy as they are all connected. A fall in the purchasing value of money means the production cost skyrockets, and the prices of goods and services follow suit. 

In a country’s economy, it could lead to poor circulation of currency, and as the name entails, it usually is a signal of danger when there is an obstacle to the flow of money. While the obvious solution should be for the country’s Central Bank to pump more money into circulation, it only leads to the opposite result, further devaluing the currency.

There are ways to overcome a price hike, but the policies that bring about the overturn of inflation are usually in the hands of government officials. Therefore, as a consumer who cannot overturn it, the most you can do is to stay above it, especially given the current state of inflation on the global scale. If there was ever a time to learn how to live above inflation, it is now. Now is the time to learn about it since inflation levels have become a global threat exacerbated in the wake of the COVID-19 pandemic.

How does one survive during inflation? Here are some ideas to consider:

1. Plan your Future Spending Ahead

That might sound confusing or not make for sound advice at first glance, but it is one of the best decisions you can make during a price hike.

With the prices of goods and commodities soaring daily, the best time to buy anything would be yesterday.

Take gas, for instance. The price of gas in different parts of the world has been rising all year. The Russian-Ukraine war has seen us witness the highest crude oil prices to date and with all the price fluctuations, we cannot predict if it will be stable anytime soon.

The mechanics of inflation are set in such a way that you can go to bed with a price registered in your mind, and by the time you rise, you find out that that price has surged. It, therefore, makes sense to plan your future spending now as you do not have control over the prices of things in the future.

This might mean buying things you do not need at the moment, but it might just be a worthy investment in the long run. 

2. Buying in Bulk

The bulk purchase has always been a means of saving extra money, and it comes in handy in a season of inflation. It is how retail sellers make their money: buy bulk products at a subsidised rate and sell at the retail price. Nothing stops you as a consumer from borrowing a leaf from their playbook.

If you can afford to, you can buy more than you need to consume in a period, especially with storable food and household items. The discount from buying in bulk would probably be enough to purchase a unit of those items but buying them one after the other might have you spending more over a given period of consumption.

Therefore, you might want to throw in more units of whatever items you have on your list the next time you visit the market or the store. As a bonus, buying certain items in bulk can allow you to acquire them at the wholesale price.

3. Avoid Frivolous Spending

This one should not come as much advice, given how obvious it is in the face of the harsh socio-economic conditions imposed by inflation. It is common sense to regulate your spending when you do not have much, more so when the little you have might not be able to buy so much.

The culture of frugal spending should be practised more during a price hike. This means that you might have to forgo the urge to splurge cash on your cravings or indulge in impulse buys.

The key to mastering this habit is to ask yourself if you can live without that purchase till after a day. If you can go without it for a day, you probably do not need it as much as you think. As a rule of thumb, only stick with the needs; the wants will comply.

4. Cut on Necessary Spending

No, you did not read that wrong. As much as you might be able to hold back on unnecessary spending during this kind of condition, there are just some spendings or bills you cannot do without. Take, for instance, utility bills or groceries; the spending attached to such responsibilities cannot be avoided. 

On the bright side, you always have the option of lowering these expenses, and how do you do that? Simple, discounts!

The truth is most of the discounts we get on different payments are often ignored and dismissed as invaluable, but they can prove to be helpful during periods when prices and bills are high. Therefore, discounts, promo opportunities, sale coupons, sales, and other marketing ploys should be maximised as they could leave you with a bit more cash. 

A second option might be to look for cheaper alternatives to your expenses until your spending power can accommodate the preferred option. 

5. Stick to a Budget 

A budget or a financial plan can guide your expenses during a specified expanse of time; therefore, it is a great tool to curtail your spending during a price hike.

However, as simple as that sounds, it takes a lot of discipline to achieve results in that department, but in the end, it is a decision that pays off.

Financial planning is vital to surviving a price boom, and it does not have to be as complex as hiring a financial planner. All that is required of you is to modify your budget to fit your current financial status. 

6. Create Emergency Savings

One of the prominent features of inflation is its unpredictability. As such, it may help if you have a stack of money saved somewhere for the possible event of an emergency.

The best time to start saving money was yesterday; the second best time is today. As your expenses go up, the amount of money you put aside for savings should also increase to match your situation.

You could get more out of your savings by saving in high-interest accounts or diversifying your funds in investments rather than just keeping your money static and possibly depreciating value in the face of a price hike.

7. Increase your Income

Another means of survival during the present condition is to look for ways of generating more income. It is not enough to depend on the possibility of an income raise, as even that might not be able to cover your expenses during this period.

The wisest decision would be to increase your streams of income. Achieving this might entail looking for a second job to support your primary job, working gigs on the side to raise money, or turning some of your skills into a side hustle. Finding a higher-paying job may even be advisable if the current one is not enough to cover your expenses. 

Whatever route you take, as long as it is legal and brings more money to your purse, it might just be the move needed to save you.

8. Have a Contingency Plan

Everyone has their go-to plan in times of emergency, but sometimes no matter how good those plans are, they can end up failing, and for that reason, it helps to have a backup plan.

A contingency plan saves you from being stranded after you have exhausted your first option and might even prove more effective than the main plan. As a tip for coming up with a backup plan, ensure that your plan B is hatched with as much caution and attention as the main plan.   

Your backup could be an emergency plan or a low-interest loan to be taken only in the case of a mishap. We hope that with these tips, you will be able to keep your head afloat during inflation and make meaningful progress. 


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