How to ease the cost of living pressure with rising inflation

Inflation, the persistent rise in prices of goods and services over time, can erode the purchasing power of money and negatively impact financial well-being. As inflation rates sit above cash rates, consumers and investors need to be proactive in protecting their finances and finding ways to outpace inflation. In this article, we’ll explore practical and effective strategies to help you manage your expenses.

Six Ways To Ease Cost of Living Pressures

Those seeking personal and practical day to day tips could consider the following:

1. Increase your income

Look for ways to boost your earning potential, such as negotiating a raise at work, exploring additional job opportunities, or starting a side business. Finding a side hustle can help you cover higher expenses or build your savings. Consider learning new skills or furthering your education to enhance your qualifications and increase your earning potential. A higher income can provide you with more financial flexibility and help you better manage the rising costs of living.

2. Prioritise your expenses

Be mindful of where you are spending and identify areas where you can cut unnecessary expenses to help you stay ahead. Focus on being efficient with essential spending (housing, healthcare and transportation) and cutting back on non-essential spending (such as dining out, entertainment and subscriptions). Call service providers and seek better rates from internet, phone and utilities which can help save you money in the long-run.

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3. Be smart with your assets

Housing is often the most significant asset for individuals and families. Consider reducing your housing costs by downsizing, renting out a spare room, AirBnb’ing your home while away on holidays yourself or moving to a less expensive area, can also help you reduce your housing costs.

4. Manage debt wisely

Inflation erodes the purchasing power of money, but it can also erode the value of debt. If you have fixed-rate debt, such as a mortgage or a loan, the real value of the debt decreases as inflation rises. This can work to your advantage, as you are essentially paying back a loan with dollars that are worth less than when you borrowed them. However, variable-rate debt (such as adjustable-rate mortgages) or high-rate debt (such as credit card debt), can be impacted by inflation as their interest rates may rise along (or at a higher rate) than inflation.

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5. Enjoy the free or minimalist things in life

There are many activities that are free or involve minimal cost, for example: museums, nature walks, coffee with a friend, read a good book, watch a YouTube tutorial, exercise, build something, drinks by a firepit, gardening… to name a few. These can provide upside and enjoyment and are not impacted by inflation.

6. Seek financial assistance and stay educated

If you are facing financial challenges, do not hesitate to seek financial assistance and aim to keep yourself informed about economic trends and market conditions. Doing so can help you make informed investment decisions and provide you with valuable insights and guidance tailored to your specific financial situation.

In conclusion, easing the cost of living pressure requires a combination of smart strategies, discipline, and patience. Stretching your money further, prioritising expenses, shopping smart, managing your debt and enjoying the free things in life can help improve your financial well-being.

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