Recently updated on: September 30, 2023
TL;DR - Inflation is the general increase of prices for goods and services after a period of time, but sometimes it moves faster than expected. When that happens, you need to adjust your spending habits and increase your earning potential.
If you've been doing your grocery shopping lately, then you may have noticed that your expenses are unusually higher than usual. It's not just in your imagination. Prices are actually getting higher, thanks to inflation.
Inflation in itself is not inherently a bad thing. It is actually a sign that the economy is growing, and along with it is the cost of living. However, there is a limit to when inflation is still beneficial.
So, since inflation is always on the news, it is still important to know about this economic concept and how we can adjust accordingly.
Table of Contents
What is Inflation?
Inflation is the general increase of prices for goods and services after a period of time, decreasing the buying power of money. It involves the costs of essentials like food, electricity, water, clothing, and oil - virtually everything.
Just think about the familiar stories our parents and grandparents tell and retell that during their time, if you have P1,000 in your pocket, it means you're rich. But today, your P1,000 bill is insufficient to buy enough food for a week for a family.
So if the current inflation is at 5%, your money lost 5% of its buying power. That is also why financial planners and personal finance influencers recommend that people invest their money to combat inflation.
Two General Ways to Beat Inflation
The causes of the ever-increasing inflation rate are beyond our control, but we can adjust and react accordingly to survive these trying times and increasing prices.
We can employ a two-pronged approach to beat inflation. The first is to decrease your spending, and the second is to increase your income.
Decreasing spending allows you to fit your expenses to match your income without debt. On the other hand, by increasing your income, you can fit your income to match your expenses.
5 Tips to Survive Inflation
Here are five ways to survive the rising costs due to inflation.
1. Use Smaller Amounts for Goods and Services.
Inflation hits the fixed-salary workers harder because salaries usually move slower than the price increase. So if you are earning a fixed income, the first thing you need to do is to adjust your spending habits.
Since inflation depleted your money's buying power, one of the first things you can do is buy smaller quantities of your regular items.
For example, if you're accustomed to buying two kilos of meat per week, you can buy 1.5 kilos instead and choose a different dish to prepare.
Another example is if you're using too much electricity on lights, appliances, and air-conditioning, there is no harm in cutting back in the meantime.
2. Buy Cheaper Alternative Brands.
Since the prices of goods and services are increasing faster than the usual salary could keep up, it would be helpful if you choose to buy alternative brands than what you would typically purchase.
For example, if you prefer a particular brand of processed meat, such as corned beef or hotdogs, choose a cheaper brand to maintain the quantity you're buying.
Buying generic items also goes with prescription medicines, cleaning products, personal care products, and more.
3. Limit Unnecessary Expenses.
The emergence of online shopping in the Philippines has caused people to spend more than they'd usually spend in physical stores, like malls and grocery stores.
However, since the current trend of inflation, not only in our country but worldwide, is alarming, it would be better to limit buying unnecessary or unessential items.
What qualifies as unnecessary may be subjective, but using your money on more important expenses like food and utilities is better.
4. Find a Side Hustle.
The first three tips listed are all on the decrease your expenses side of the equation, while the next two are on the increase your income side.
Unlike business owners, freelancers, and other people earning variable incomes who can adjust their rates or increase productivity, most fixed-salary workers don't have that luxury. This is where a side hustle comes in.
You can choose from many side hustles, but make sure it would be fine with your day job. Since we live in the Internet age, finding a second or third source of income is simpler.
If you have a knack for writing, you can be a content writer on the side. If you like photography, you can sell your photos online. If you like editing video content, you can be an online video editor. Your side hustle may be one Google away.
However, not everyone is comfortable working online jobs, but that shouldn't stop you from finding side hustles.
If you have a car or motorcycle, you can be a ride-hailing app driver on apps like Grab or Angkas. If you have many items that you want to get rid of, you can sell them to earn some additional money.
5. Find a Higher-Paying Job.
Finally, if you have already tried limiting your spending habit and finding other sources of income but are still finding it too hard to get by, then it may mean you need to find another job.
You can also use the Internet to find the perfect job that fits your personality and hobbies.
There are also work-from-home options available to other industries. Or you may change your career to prepare yourself for the future better. You may even be surprised at how many opportunities are suited for you.
They say that the grass is always greener on the other side, but there, you may also have to look at other considerations besides the salary, like company culture.
Inflation affects everyone, and we can't do anything to influence that. However, we can change our lifestyles to decrease our spending, or we can try to increase our source of income.
Aside from lifestyle or career changes, it is also essential to prepare for your future by investing in assets that can beat inflation.