Every year you decide to turn over a new leaf and make a plan of action to achieve your goals with lots of exuberance. Unfortunately, the fleeting zeal comes to an end as soon as you realise that it is a real effort.
Financial resolutions are quite common among people, but this year people do not hold much hope of having their finances improved. Not to mention, the economic crisis is what is coming their way to gain financial independence.
Last year in October, you faced a steep rise in the prices of gas which are expected to go up further in April. After the end of the first quarter, the benefits will be halted you have been given to meet the rising cost.
By increasing your income sources, you will be able to cover your living cost without much worry, but on the other hand, it is all but impracticable to find a job with higher pay. If you somehow manage to get a good hike from your employer, it cannot be proportionate to the inflation rate.
Therefore, it is crucial to keep a tight rein on your budget. It could be hard to bite the bullet, but you have no other way around it.
Ways for beating lifestyle inflation in 2023
Here are the effective ways you should follow to have control over your spending:
1. Use a reverse budget technique
To make a reverse budget successfully work is quite daunting because it is a labyrinth to prognosticate the exact figure you need for total monthly spending. Having a foggy idea about your spending prompts you to use your money the way you want and then set aside what you are left with at the end.
Financial experts do not appreciate this kind of practice as it does not allow you to adjust your spending to the current inflation rate. If you pay yourself at the end of meeting all expenses, you will end up with little or no money as prices rise.
You should instead follow a reverse budget technique that allows you to pay yourself first. You cannot just choose a random figure. Look over your bank statement for the previous three months to see the average monthly spending.
The next step is to sit and figure out the areas where you can cut back on. Aim at setting aside at least 10% of your monthly income. If your budget has got some wiggle room after cutting back on your sending, you can increase your contribution.
2. Prioritise paying off debt
A reverse budget will only work when you are not buried in debt. If you have some debt, make sure that you come up with a repayment plan that lets you get rid of them as soon as possible. Debt must be your priority, so unless you have settled your dues, you might have difficulty building an emergency cushion.
If you cannot come up with a repayment plan that works smoothly, you should talk to a debt management agency. It will analyse your spending and then offer you a plan that works in your favour. If you have so many debts like credit card bills, auto loans and loans for bad credit from direct lenders, you should give priority to the most expensive debt.
Credit card bills and bad credit loans will accrue interest rapidly, so make sure that you settle them first. However, it certainly does not mean you can avoid car loan payments. Talk to your lender if they can offer a payment holiday or reduce the monthly payment unless your financial situation improves.
3. Stop comparing yourself with others
If you want to beat lifestyle inflation, you will have to stop keeping up with the Joneses. If you try to compare yourself with others, you will end up draining your finances. Everyone’s financial situation is different, so it does not make sense to compare with others and then beat yourself up.
Instead of comparing it with others, you should try to compare your current financial situation with the previous one. For instance, if you have been following your budget for a long time, you can see how much improvement you have made in your financial condition.
This will make you motivated to stick to your budget as long as your today is better than your yesterday. You are better off. You do not need to criticise yourself even if people of your acquaintance are in a better situation.
4. Limit restaurant meals and shop wisely
This year, you will have to cut back on your discretionary expenses to beat lifestyle inflation. Restaurant food makes up a significant proportion of your inessential expenses. It can take a large chunk of your budget. Therefore, it is recommended that you avoid restaurant meals.
Instead, you should prepare meals at home. Many people make an excuse to do so, but this can cost you an arm and a leg. If you prepare meals at home, you will be able to save a lot of money. Take advantage of weekends to do all preparations for preparing food on weekdays. For instance, you can chop all vegetables to prepare soup and dishes.
Cook dishes that consume a long time to get ready at weekends when you are home. It takes way less time to prepare eggs and chips, sandwiches, soups, etc. Such dishes should be a part of the weekly menu. Try to learn some easy recipes from YouTube. Learn recipes of food you can prepare within minutes.
It is essential that you keep an eye on your shopping behaviour too. A rule of thumb says that you should shop only when it is necessary. Do not get indulged in online shopping to seek pleasure. Likewise, you should uninstall shopping apps from your mobile phone because constant messages about offers could prompt you to make an order even if you do not need it.
If you need something, try to buy it online. This is because online shopping is way cheaper than in-store shopping. If you have a couple of things to buy or order something in bulk, you can evade paying shipping charges. This makes it more affordable.
5. Live a frugal lifestyle
Living a frugal lifestyle will help cope with the rising rate of inflation. Finding ways to save money on shopping and travelling is not just enough. You may have to downsize. For instance, if you have got to live in a big house, you can move out to a smaller home.
As far as it is vacation, it is not necessary for you need to plan an international trip. There are so many fun activities that you can do without shelling out money. For instance, you can plan a picnic, visit a zoo or a local museum.
The bottom line
Beating lifestyle inflation can be challenging for you, but it is not impossible at all. By creating a budget, you will be able to keep a tight rein on your spending. In addition, you should live a frugal lifestyle. Make sure that you do not compare yourself with anyone and find ways to save money in shopping.
Debt priority is a must. Otherwise, you will never be able to gain better control over your finances.