It’s the buzzword for the year (after COVID-19 and endemic, that is) – INFLATION. Everyone’s talking about it, everyone’s moaning about it. First things first, here’s an easy way to understand what inflation means: When your money can’t buy what it used to. For example, RM10 may get your three oranges before but because of inflation, it only gets you two. It’s basically a general increase in the prices of goods and services, causing a reduction in the value of your money.
Our country’s annual inflation rate has increased to 2.9% in May 2022 from 2.3% in April 2022. Since October 2011, food prices have increased to 5.2%, which is why eating out is so expensive these days! And it’s forecasted to keep going up!
How will this affect you? Many, many ways! For starters, you get fewer oranges with your salary but on a bigger scale of things, it increases your cost of living – food, electricity, clothes, regular maintenance of stuff (aircond servicing for example). And the downside is your income remains the same or at best matches the inflation rate, which means you won’t have anything extra to save for rainy days.
You could ask for a raise to help with the cost of living but with inflation as high as it is now, chances are even your bonuses might be reduced while pay increases are put on a freeze (companies have many expenditures too that also go up no thanks to inflation!). Still, it doesn’t hurt to ask especially if you are working in an industry that is currently thriving. Just make sure you read this article first on how to navigate the tricky situation of asking for a salary.
How else to survive inflation? Here are some ideas:
#1 Don’t spend unnecessary
Like eating out all the time. With food prices on a steady incline, it will do you (and your bank balance) good if you pack lunch more often. Also, take a good look at where your salary is going these days. Do you have any monthly subscription you can live without? Any unused health club membership? Consider cancelling them if you’re not using them anymore or if you could do without it for a while (run outdoors!). Every little bit helps!
#2 Shop differently
You know your favourite almond milk? Well, you might want to cut down on that and opt for a cheaper, more generic version. Love shopping online? Give that a temporary break until the money front looks more positive. Constantly upgrading your work wardrobe? Time to go through what you currently have and see how you can stretch them further. No more shopping sprees!
#3 Invest if you can!
Say you do have extra cash – congrats! Instead of spending it, invest it! Many financial experts says investing is key to beating inflation as your money will continue to grow even when the rates are high. Plus, you’re not spending it unnecessarily so that’s a bonus anyway!
#4 Bank smartly
You put your excess cash in a savings account – good job. But what you really should be doing is putting it in a high-yield savings account so you get better returns for the same amount of money. Speak to a financial planner at the bank and see what’s best at the moment. Think you have too little to save? No such thing as a small amount! Banks are open to whatever amount you want to save so find out how to make your money work harder when you’re not spending it.
#5 Side hustle… or upgrade
Company not giving anyone a raise? Redirect whatever extra time you have to a side hustle. Aside from improving your financial situation, it’ll give you valuable skills that might take your career to a whole new level. Or if there is an opportunity to take on more responsibilities, put yourself up for it. This is a great way to show that you’re ready to take on more… and be paid more!
#6 Continue saving
Yes, it’s tough especially when you are paying more for everything. But still make it a habit to continue saving. At the very least, you have some money stashed away still for emergencies until things stabilize or you get a raise.
#7 Consider changing careers
Tough one this but if you are in a struggling or shrinking industry, you might want to think of a career change into a growing industry. This is one way to beat the inflation and to make your more employable with a bigger salary.