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Personal Finance

Navigating inflation: 4 practical tips to stretch your dollar

It can be hard to make our money last in today’s economic climate. As inflation continues to soar, everyday prices for goods and services continue to rise, making it difficult to stretch your dollar. This situation can make budgeting and money management challenging, especially for those with a fixed income or limited financial resources. However, there are a few steps we can take to help us manage our money more effectively during periods of high inflation.

Here are four practical tips to reduce the impact of rising costs on our budget and make our money go further:

1. Prioritize your spending

It’s essential to plan your spending during times of inflation. It helps to be more mindful of our most necessary expenses and make the most of our money. The first step is to create a budget and list your expenses. This will give you a clear picture of where your money is going and where you can make changes. When you have a budget, you can prioritise your expenses and focus on what is most important. This includes necessities such as food, shelter, healthcare, and things that bring you joy and contribute to your well-being. For example, if you have difficulty paying your rent or mortgage, you may need to prioritise housing expenses and cut back on other costs, such as dining out or entertainment.

Similarly, you may need to prioritise healthcare and reduce spending on clothing or travel if you have high medical expenses. It’s also important to remember that everyone’s priorities are different. What is important to one person may not be as important to another. You should prioritise your spending based on your own needs and values. It’s also vital to be adaptable and willing to make changes as your circumstances change.

2. Finding free or low-cost activities

There are numerous ways to have fun without spending much money. One strategy is to prioritise experiences over material possessions. Instead of purchasing expensive items, consider going for a walk or hike, visiting a local park, or attending a free community event. These activities are not only cost-effective, but they also promote physical and mental well-being.

Another way to find free or low-cost activities is to use the resources in your community. Many libraries provide free books, movies, and other forms of entertainment that you could borrow from the library rather than purchasing them. Many museums also offer free or reduced-price admission on certain days of the week. You can also look for volunteer opportunities, which can be a great way to give back to the community while having fun. Many organisations rely on volunteers to help with events and projects, and it can be a great way to meet new people and learn new skills.

3. Cooking at home

Eating out can be expensive. Cooking at home, on the other hand, can save you money and is often healthier. When you cook at home, you can control the ingredients and make choices that meet your dietary needs and preferences. You can also buy ingredients in bulk and use leftovers to save money on your grocery bill.

Another advantage of cooking at home is that it can be a pleasurable and rewarding experience. You can try new recipes, learn new skills and techniques, and bond with your family and friends over a home-cooked meal. Cooking at home can also help you save on transportation costs since you don’t have to travel out for your meals all the time.

4. Buying used goods

With rising prices, it can be challenging to afford the things you need and want. However, buying used goods can be an excellent way to save money while still getting the necessary items. There are numerous places to find used goods, including thrift stores, garage sales, and online marketplaces such as eBay, Carousell, and Facebook Marketplace. These marketplaces often have a wide variety of items available at a fraction of the cost of new things. 

Buying used goods is also be a sustainable way to shop. It reduces the demand for new production, lowering the environmental impact of manufacturing. When purchasing used goods, it is crucial to thoroughly inspect the item to ensure that it is in good working order. Additionally, it’s essential to know the return policies or guarantees the seller offers.

The fifth perspective

Inflation has a real-life impact on our wallets, and it is important to be mindful of our personal finances as we get through this challenging economic period. Inflation affects all of us and how you stretch your dollar can make a significant difference to many of us.

It’s good to remember that inflation is a normal part of the economic cycle. With the right financial habits, good planning, and smart money management, you can come out stronger on the other side.

Choon Leo Wang

Choon Leo is a growth-focused investor with an interest in innovative platform businesses that connect users and fix market inefficiencies. He believes that companies with the most competitive business models will compound in value over the long term. He currently holds CFA Level I qualifications.

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