What Can You Do with the Current Inflation Rate?

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With the country reaching a record high inflation rate of 6.4% in August, the highest rate we’ve experienced in almost a decade, Philippine media platforms have been abuzz with news of the inflation.

On Facebook and Twitter, screenshots of news reports comparing the prices of goods in the market have surfaced. The prices of many kitchen staples have doubled, while the flavorful siling labuyo is now available at more than thrice its original price. In Malabon Market, the siling labuyo cost Php 1,000 per kilo as of September 2.

Inflation is not new; it has been affecting prices gradually over the years. We used to turn a blind eye to the continuously increasing inflation rate, but now, the cost of goods is too steep for us to simply say, “bahala na.”  We have to be smarter with our money now to stay afloat.

What can we do to overcome the challenges of this inflation?

Cut Expenses and Adjust Your Budget

Today’s prices call for reassessing your spending habits. If you have a fixed budget, you might want to readjust it to accommodate changes in the prices of food, gas and other commodities. Determine where you can lower your expenses:

  • Opt for online subscriptions – If you subscribe to paid print magazines, you might want to stop your subscription and sign up for free online mailers instead.
  • Reduce water and power consumption – Observe how household residents are using water and electricity. Do you close the faucet immediately or turn off the lights when not in use? Or do you let the appliances run even when not in use?
  • Choose prepaid – Do you subscribe to postpaid mobile or phone services? Do you use all of the features bundled with your plan? If not, you might want to optimize a mobile plan instead. How about your cable TV? Do you subscribe to postpaid TV but surf the internet more or spend days away from home. You can get more value for your money by choosing prepaid or subscribing to promos.
  • Look for cheaper alternatives – Find lower-priced versions of the things you often buy. You’ll discover that for many products, the price merely covers the brand rather than the quality. You might also find that buying in bulk is cheaper than buying things as you need them.
  • Eat out less – Since the hardest hit now are the fresh produce and food items, you might want to curb the times you eat out and avoid the pricey restaurants for a while. Maybe you can even grow some of the plants you use for cooking, such as calamansi, onion, ginger and siling labuyo, which all grow in pots.
  • Choose gas-less transportation – Ride a bicycle or walk to work if you can. Not only will you save money, but you can have enough exercise.

Avoid Making New Loans and Reconsider How You are Settling Loans and Debts

Loan rates increase with inflation rates. It’s one of the methods many central banks use to reduce inflation rates. This is why the Bangko Sentral ng Pilipinas increased interest rates on August 9 and June 20 of this year. So if you can avoid it, try not to make new loans until the economic climate looks better.

For those who have fixed-term loan installments, you’re lucky. But for those with flexible terms, expect the interest rates of your loan to increase. The same goes for those with credit card debts.

Now is a critical time to take control of your debt. Consider strategies like the avalanche where you put all your extra money towards your debt with the highest interest to eliminate it ASAP. When that’s settled, you can target the debt with the next highest interest rate, and so on.

If you are considering taking a personal debt consolidation loan, make sure that the interest for that is lower than all the interest rates of your current debts combined. Because of the country’s current situation, lenders need to safeguard themselves and find a way to make a profit, so the only advantage you might get from a consolidated loan is the convenience of paying only one lender.

Save Smarter

For many of us Filipinos, saving is not easy. Apart from food expenses, many of us lose a big part of our take-home pay to public transportation. For others, there are always debts to be paid or distant family members who need financial help.

Setting money aside for future use is a must, inflation or not. We have to understand, though, that simply setting money aside is not enough. You have to let go of the belief that “a penny saved is a penny earned” and readjust your thinking to “a penny saved is still a penny.” Actually, make that belief “a penny saved in 2018 has very little value in 2040”.

The Solution?

Put your money where it won’t sit idly. It doesn’t have to be the stock market. If you’re not ready for the stock market or just want something that feels less like a gamble, you can opt to join a cooperative. Find a reputable one where the decision-makers really know how to handle and grow your money.

You can also look for bank savings accounts with high interest rates or other perks such as life insurance. Many advise against this, but you will still need some amount of money in a savings account in case you need cash ASAP. Just make sure that you don’t let most of your money go to this account.

Get Creative

We can’t stop inflation and we can’t stop ourselves from needing basic goods, but we can get creative.

One way is to convert spending into savings through rebates. Ditch credit cards with high interest rates. If you have multiple credit cards, cancel the others and keep one. This will help you consolidate all purchase points into one card and curb your spending. Once you accumulate enough points, you can use that for a free meal, discounted gas refill or more.

Another way to convert spending into savings is to use apps like Snappcart. This app allows shoppers to get rebates and rewards simply by uploading snaps of their receipts. You can earn cash back from your grocery receipt as well as medicine and cosmetics.

It’s hard to battle inflation but you can find ways to minimize and protect yourself from the effects of inflation. The best route is still to avoid bad debt, live below your means and make wise investments.

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