Were your plans upended by the pandemic? Did it seemingly affect your ability to plan for a secure financial future?
Despite the difficulties you may be dealing with due to rising costs of living, achieving financial freedom is still possible.
Much of the stress stems from our lack of control over many of the causes that have contributed to the rise in prices of consumer goods.
If you’re a young person living in today’s crazy world, financial planning in your 20s may have to include planning for multiple jarring world-wide events, unfortunately. You won’t have the same level of stability your parents’ generation had to fall on.
So much has become scarce as a result of the pandemic and other world events. Lack of raw materials and plant closures have harmed manufacturing. Increased transportation prices affect every industry.
And we know that consumers bear the cost of these issues.
Add to this rising inflation, persistent global economic woes, and the possibility of higher interest rates. Things may just spiral out of control. But in the meanwhile, what can you do to weather the storm?
How To Deal With Increasing Costs Of Living
1. Save on your grocery shopping
Groceries tend to take up a large portion of our monthly budgets, and costs have been increasingly rising recently. With forecasted price raises for the rest of the year, now is the time to put to use some of these tactics below:
- Rather than going through a drive-thru, make breakfast at home. Breakfast is usually a low-cost meal that can be prepared easily at home, so stock up on some breakfast items and you’ll be spending less than half what you’re currently spending.
- Before you go to the supermarket, make a weekly meal plan and shop for your pantry and freezer. Plan your meals around what’s on sale or available at a discount to save even more money.
- When the larger packets are on sale for a lower price than the smaller ones, buy them in bulk. If bulk buying is too much for you, go shopping with a friend and split the costs.
- Get to know your cheaper retail stores, and what items they have in stock. Hand soap from the dollar store can clean your hands just as well as expensive bottles from a higher-end retailer.
- Cook in bulk and freeze the leftovers for lunch or supper on days when you don’t feel like cooking. This reduces the expense of convenience and the likelihood of ordering takeout or stopping at the grocery store for something quick and easy.
2. Decide what is truly necessary
Maslow’s hierarchy of needs states that there are certain foundational requirements to be met for a human life to be comfortable, including food and shelter.
After these basic needs are met, socializing and other needs are likely to be classified as wants.
However, the distinction is not always clear-cut for every person. Be sure to define your own personal needs, if only to be able to arrange your budget in a more effective way that is conducive to your life priorities.
3. Scale back your consumption
Look for more frugal ways to purchase items once you’ve decided if it’s a need or a want.
Consumption reduction is beneficial to both our money, our environment, and potentially our health. Make a promise to yourself that before you buy anything new, you’ll check what you already have at home.
Ask friends if they have anything you need that they aren’t using, and look into buying used or upcycled items. This could involve joining a Facebook group in your neighborhood to see who has stuff for free, what’s on sale at the local discount store, or where the garage sales are being held at next weekend.
It takes a little extra time and effort to shop around. You might not get all you want whenever you want it. You’ll be tempted to go to your favorite supermarket and round up everything you need in one trip, but you’ll probably be paying dearly for it.
4. Work your budget
The amount you spend on living expenses will vary depending on your wage and the cost of living in your city.
The amount you pay for rent, for example, is determined by your location and standard of living. Same with food.
Rent in Los Angeles will be much higher than in Detroit. A three-story house will cost more than a one-bedroom flat. Dining out will cost more than cooking at home.
You can come up with a preliminary estimate for your living expenses regardless of your tastes or where you live. Be sure to include housing, food, clothing, transportation, and healthcare as the primary categories to concentrate on. Examine each component and make an approximate estimation of how much you’ll be spending on each on a monthly basis.
Experts recommend that you build your budget utilizing the 50/30/20 rule, especially if you’re a young adult. The 50/30/20 rule provides a fundamental financial plan for spending and saving.
According to this rule, you should be spending 50% of your salary on needs such as rent and car payments.
You should be spending 30% on wants, such as a night out with friends or a weekend getaway.
Lastly, you should be setting aside 20% of your salary for a rainy day fund or a down payment on a future house.
There is some flexibility in the 50/30/20 rule because it is a guideline. You can change the percentages to fit your specific situation.
The fundamental concept is to keep your necessary living expenditures to about half of your income. That way, you’ll have enough left over for savings and leisure.
5. Negotiate your bills
You may be able to reduce some of your bills when revising your budget.
You could save money if you’re willing to transfer carriers or ask your existing ones if they have better rates or lower plans. This is a fantastic way to save money.
Unfortunately, it can be time-consuming.
If you do have the time, go for it. For those of you who might not have that much time, or would rather spend your time doing other things, check out these popular bill-saving apps known as Hiatus and Truebill.
In a nutshell, they do all the negotiating on your bills for you. Check out our review of the two side by side.
6. Ask for a raise to keep up with inflation
Another suggestion is to request a cost-of-living increase from your company.
If you live in an area that is becoming increasingly costly, you should request an income adjustment. It will be easier to manage rising expenditures with a higher wage.
Some employers provide cost-of-living adjustments regularly, but not all do. If your boss hasn’t offered you a raise in a long time, you may need to initiate the conversation.
Make sure you do your homework and are prepared to demonstrate to your boss why you deserve a raise. It’s always a good idea to know your value and to be an advocate for yourself.
7. Consider a side hustle
A side hustle can be a terrific way to supplement your income.
Choose a side hustle that you are enthusiastic about so that you can enjoy the experience as much as possible while doing it.
You should also figure out how much more money you’ll need to make for the side gig to be worthwhile for you. You never know, your side hustle may lead to your full-time income at some point in the future!
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