November 11, 2022
Price rises because of rampant inflation. You are compelled to spend more money on necessities like groceries, water, and energy bills, apart from insurance and mortgages. For many, inflation could imply that you have far less money available for saving and investing than in the past.
A high inflation rate means less security, more mental distress, and a more unpredictable situation for people who don’t have any financial cushion.
It is challenging for Filipinos to find extra money for savings because of the sky-high consumer costs and inflation that continues to outstrip pay growth and savings rates.
Despite this, it’s crucial to save — or keep your savings intact — especially considering the possibility of a recession. There are steps you can take to lessen the impact of inflation on your finances, safeguard savings, and improve your general financial health up until the beast of inflation is tamed.
It might be easy to spend all your salary before realizing that you have no more money left over for savings. It’s crucial to budget ahead, determine how much you can easily set aside from each paycheck, and then start saving that money right away.
Your overall income, the size of your household, and your savings objectives will all affect how much you should save. The 50/30/20 rule, which states that 50% of your income should go toward needs, 30% should go toward wants, and 20% should go toward savings, is a popular budgeting method.
For many people, especially those who are living paycheck to paycheck, saving 20% of their salary might not be a realistic goal. What matters is trying to reduce spending and developing a strategy to set aside some cash at the beginning of each month for savings, with the intention of not using that money for regular expenditure.
After you’ve set aside some money from your budget to create a sizable buffer of savings, think about how to effectively organize your expenditures while keeping an eye out for areas where you may cut costs. To reduce impulse purchases, you might increase your level of financial awareness.
Prioritizing the reduction of consumer debt, including credit card debt, is an excellent strategy. In the long term, you can save more if you pay off your debt faster because less interest will accumulate.
Additionally, in a rising rate environment, the amount you save on future debt payments can exceed the interest rate on a savings account.
The two industries with the highest inflation rates are food and energy. Potential savings may be reduced by the high prices of utilities like energy and water. With a few easy lifestyle adjustments, you can save energy, especially during the colder months. Additionally, doing so aids in creating a greener nation and lowers overall resource usage.
Grocery prices have likely seen some of the biggest price hikes when it comes to high costs. When compared to a year prior, the price of eggs increased from 10 pesos to 15 pesos a piece, with other necessities like butter and milk not far behind.
Compare brands while you shop for groceries or household items to discover if there is a less expensive option. Look for store brands, which are frequently much less expensive than other brands, and purchase produce from nearby vendors.
Also think about replacing certain ingredients with less expensive ones. For instance, you may use oil over butter when cooking.
One of the numerous methods to protect your money and stop it from losing value during periods of severe inflation is to purchase bonds. When you place money in bonds, you frequently have to “freeze” it for a specific amount of time.
Short-, intermediate-, and long-term bonds are only a few of the many products available on the market. You can diversify your portfolio using bonds to increase its resilience to sudden fluctuations in the market.
In today’s economy, it’s simple to feel defeated due to exorbitant pricing for necessities like groceries and recession fears. But now is an excellent time to learn about money matters and search for potential prospects.
Undoubtedly, consolidating your debt should be one of your top financial priorities. You can attempt to reduce your debt while resolving to set aside at least a small sum of money for an emergency savings account. This can help you stay longer and be more financially secure.
Put money aside for emergencies and, if you have any extra cash, invest it before it loses value to go through difficult times with less financial stress.
Investing is now easier than ever. With the tools and resources available to help you in making informed investing decisions, you can now start investing with mutual fund companies in the Philippines. Cocolife Asset Management offers portfolio management for bond and stock funds as well as dollar funds to help you live a future-proof life!