IN THIS POST
- Assess Your Expenses
- Find Ways to Save Money
- Increase Your Income
- Cut Your Expenses
- Shop Smartly
- Adjust Your Priorities
- Track Your Transactions
- Save Extras for Later in the Month
The inflation in Pakistan has reached an all-time high. The prices of petrol and groceries have seen a sharp rise in the past months, making your wallet thinner with each passing day. Given the current situation, you may have found yourself wondering how to adjust your expenses without compromising on your lifestyle. While there is no denying that an average person needs to make more money than before to make ends meet, there are a few tips that can help you manage your budget during inflation.
According to the latest reports, the Consumer Price Index in Pakistan jumped to a whopping 202.53 points in January 2023 from 196.86 points in December 2022. Moreover, compared to January 2022, the core consumer prices in the country increased by 15.40% in January 2023. It is also worth noting that housing, water, electricity, fuels and food are the divisions that saw the most significant surge in prices.
Needless to say, the impact of inflation on the family budget cannot be ignored. However, as overwhelming as it may seem, you can fight the impact of rising costs by being smarter with your finances. This blog will guide you on how to adjust your budget for inflation while meeting your basic needs.
How to Manage Your Household Budget During Inflation
Setting a monthly budget for your household is the first step in learning how to save money during inflation. It will save you from financial stress and ensure you have some emergency funds for a rainy day. It is recommended to opt for a zero-based budgeting method where all expenses have to be justified for a new period. This stops people from spending their hard-earned money on things they don’t really need.
Let’s look at the tips that will help you manage your budget during inflation.
Assess Your Expenses
The first budgeting tip is to review your spending. You must understand which parts of your budget are being hit the hardest due to inflation. For example, if you live in a rental property and have to pay a certain amount to your landlord every month, it probably takes a huge chunk out of your income. Fuel, groceries, utility bills, school fees, and medicines are also what people spend most of their money on.
Creating a monthly budget and assigning a certain amount to each of your biggest and critical expenses will allow you to determine how much money you can spend on other things, such as dining out and shopping.
Find Ways to Save Money
Although it is easier said than done, you must try and find new ways to save money. This will help you free up some cash that you can instead use on other necessities. Of course, doing so could be difficult due to the rising prices of basic commodities, but you can begin by cutting back on groceries or buying certain items in bulk. In addition, you can opt for meal planning and switch to generic brands for better value.
Similarly, you can save money on utility bills by installing energy-saving lights and opting for inverter air conditioners. Reducing your visits to coffee shops and restaurants can also play a vital role in bringing your budget under control during tumultuous times.
Here are some more money-saving guides that you may find helpful:
Increase Your Income
The next budgeting tip to beat inflation is to make extra money. Since your expenses are likely going up, the most efficient way to offset this disturbance is to increase your income.
There are several tried-and-tested ways to earn passive income. For instance, you can rent out a portion of your property to generate a steady secondary stream of income. You can check out our comprehensive guide on how to rent out your house for more information.
There are also some creative ways your home can make extra money for you – for example, you can rent out your garden or backyard to host formal events, board pets for owners, start an organic home garden and sell the produce, store other people’s stuff for a small fee, and much more.
Cut Your Expenses
Another tip to manage your budget during inflation is to cut your spending. You may already be aware of the things that are putting a strain on your wallet even though they are far from being necessary. Although it can be difficult to break habits, it is recommended to thoroughly review your budget lines and trim out expenses that you can do without for a while.
For instance, you can limit yourself to one streaming service instead of subscribing to several. Moreover, it may be a good idea to say goodbye to your premium music subscription and avoid buying new clothes until you actually need them. Online shopping is yet another thing that can eat your budget without you realising it. To keep yourself from buying things impulsively, delete your credit or debit card details from your most-frequent e-commerce apps.
While some of these suggestions may sound rather stringent, please remember that these changes aren’t permanent. These tips will help you maintain your lifestyle during inflation without incurring any debt.
Shop Smartly
The price of eggs, milk, oil, sugar and other pantry essentials has skyrocketed in the last several months. While costs are rising everywhere, you can still learn how to save on groceries during inflation if you shop smartly.
The first thing you should do is check out the prices at wholesale stores and discount shops. These places generally offer goods with a lower price tag, which could be beneficial for your wallet. You can also download a few different shopping apps and keep an eye out for special discounts on items of daily use. Many vendors also offer discount vouchers on online purchases, though please make sure to only buy things that you really need instead of spending money on extras.
Another thing to keep in mind is to ship from stores that offer loyalty cards. Once your reward points reach a certain limit, you can use them to buy your groceries.
Adjust Your Priorities
Next, if you want to manage your budget during inflation, you must reassess your financial priorities. While you may not have any control over the current economic situation, it is recommended to exercise some control over your spending habits and save money for your emergency fund.
Moreover, do not live on credit cards. Although it may seem very tempting, please remember that paying off debt would surely add to your financial difficulties. However, if you have some money saved up, now is probably the best time to invest it in real estate as it is considered a hedge against inflation.
Please take a look at the following blogs for more information:
Track Your Transactions
It is easy to get swept away in the chaos of everyday life. However, if you have made a budget, you must make sure you are sticking to it.
Every expenditure and income should be added to your budget, as it will allow you to figure out how much money you can save or allocate for different uses. If you make extra money during the month, add it to your budget. Similarly, if you face an unexpected expense, please make sure to adjust it accordingly.
Doing so may seem a little difficult at first. However, once you make it a practice, it will get easier. If you pay for utilities and other essentials online, it would be easier to keep a track of things. However, if you don’t, you can always keep the receipts from your purchases to figure out how much money you have spent.
Save Extras for Later in the Month
Sometimes, expenses can change from month to month. Therefore, it is always a good idea to wait to spend money on extras until the end of the month.
Now, you may be wondering what we mean by ‘extras’ here. Well, it usually refers to recreational expenses that can be delayed without much hassle. For instance, if you want to attend a concert or visit a new restaurant in town, you can probably wait to do so until you are sure your utility bills are covered, the rent is paid, and there is food in your pantry.
This concludes our guide on how to budget during inflation. If you have any questions or want to share your feedback with us, please feel free to do so by emailing us at blog@zameen.com.
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