Budget Busters – The Inflation Monster

Inflation, like taxes, cannot be avoided. It is a fact of life, something you have to deal with and move on. However, you need to have an open mind. The natural response to rising prices is to throw more money in – increase your budget. This is not always necessary. There are other options. The option you choose depends on your particular circumstance.

If you are comfortable, and can easily afford to increase your expenditure to make up for inflation, then that is okay if it aligns with your financial goals. However, for the financially literate, this increase should come from your profit, not your wages. This means you grow your income to cover this shortfall through one of your multiple streams of income, rather than simply allocating a larger percentage of your salary to living expenses. This keeps your financial independence plan on track, that is, not depending on your salary.

One way to deal with inflation without spending more money is to look for areas in your budget you can reduce waste. There are a thousand and one blogs online with useful tips on how to reduce costs and live on a budget. You can still make your budget work without spending more. There may be things you can do without lowering your standard of living. There may be things you pay for but hardly use. These are prime candidates for a budget cut.

Another way to deal with inflation without spending more money is by buying cheaper options, or shopping elsewhere. If you look around, you may find a place to buy the same things at a cheaper price. It is also possible to get about the same quality but at a lower price by switching to a not so well known brand. For consumables like groceries etc, there is no point in spending money on a brand if a cheaper one gives you the same quality. Grocery is not something you look at durability, safety, or life cycle cost as these are fast-moving consumer goods.

This means you go about your shopping in a strategic manner. You buy items when they go on sale or have coupon deals if possible and simply stock up to last until the next available window.

All these maneuverings are just to steady your financial ship while you get your act together financially. By the time you achieve your financial goals and generate multiple streams of income, you can afford to buy what you want, when you want it. You don’t want to spend the rest of your life clipping coupons, looking for sales and reduced prices, and allowing prices to dictate what you buy. But until then, you need to steer the course toward your financial goals without allowing inflation to create a dent in your finances