4 tips to help you manage your spending in times of inflation

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Budgeting during inflation helps avoid debt and cuts down on unnecessary spending. Photo: Sazzad Ibn Sayed

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Inflation tips

Budgeting during inflation helps avoid debt and cuts down on unnecessary spending. Photo: Sazzad Ibn Sayed

Inflation pinches your wallet. This reduces your purchasing power, so you are now buying less than what you bought a few months ago with the same amount of money. Rising prices for goods and services lead to an increase in the cost of living. However, inflation does not only affect you or your country alone, inflation is increasing globally. So no matter where you live, it’s time to sit down with a clear head and crunch the numbers so you don’t spend more than you earn.

“Inflation typically puts pressure on our portfolio because incomes don’t usually grow at the same rate as prices,” said Syed Rashed Zaman, a Bangladeshi-American and director, Fraud Analytics and Reporting at US Bank, l one of the largest banks in the country. United States.

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Asked how budgeting can help in these times of inflation, he replied, “Price increases during inflation are passed on to the end consumer. Therefore, budgeting during inflation helps us to avoid get into debt and reduce unnecessary and non-essential spending.”

Budgeting is perhaps the most important tool that helps us manage our money wisely in times of economic volatility.

Let’s look at some ways to lessen the impact of inflation on our portfolio. There are various measures that we can take on a personal level to survive the inflation surge.

Reduce non-essential expenses

“When setting a monthly budget, keep your disposable income in mind. Your budget should consider what you need versus what you want,” says Syed Zaman.

Take a break from casual shopping, buy only when you need something. Photo: Sazzad Ibn Sayed

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Inflation tips

Take a break from casual shopping, buy only when you need something. Photo: Sazzad Ibn Sayed

Disposable income is the money you have available to spend, invest or save after paying your income taxes. Spend your disposable income on essentials during these times. We all have essential expenses such as rent, mortgage, tuition, car payment, food, utilities, gas, etc. This is the time to make sure these essential expenses are covered before purchasing non-essential goods and services.
Take a break from casual shopping, buy only when you need something. It’s time to stop shopping on a whim. Reduce your non-essential expenses such as clothes, shoes, restaurant food and beverages, movies, streaming service subscriptions, gifts, big celebrations and parties, etc.

Do not borrow

You may have a credit card, but don’t use it with the expectation that things will work out quickly and you can pay it off. A common tendency among people who don’t have a good budget is to live on other people’s money. During inflation, people trying to maintain their old way of life often borrow from banks or other people, which gets caught in a debt spiral.
“Watch your credit obligations and always try to pay off the card with the highest interest rate. Keep in mind that for most credit cards, the interest rate is variable, which means that the financial institution can change it at any time based on your current risk profile,” says Syed Zaman.
“Try your best not to keep a ‘card balance’ and always aim to pay more than the minimum due,” he added.

Report travel plans

International travel has become more expensive, which means budgeting for overseas travel has become more complicated. At the time of writing, the US dollar exchange rate has exceeded Tk. 100 for the first time in Bangladesh.
Soaring oil prices and global inflation mean that you will now have to spend more than originally planned. Unless you desperately need a vacation right now, delay your vacation. However, if you think you should take advantage of a vacation abroad this year, do the math before buying your plane ticket or booking your hotel room.
If you’re looking to enjoy the holidays this year, instead of flying out of the country, maybe you can explore your own country! Take road trips with your friends and family.

To save money

Savings can save the day. When things go wrong, they often get worse quickly. Even if you are currently in a healthy financial situation, you don’t know if it will always remain the same. Therefore, to enjoy financial security in times of economic hardship, save some money.
You don’t know when something unexpected might happen to you, so it’s important to have an emergency fund. However, with our wallets tight, it is becoming more and more difficult for many of us to save money.

To enjoy financial security in tough economic times, save money. Photo: Sazzad Ibn Sayed

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Inflation tips

To enjoy financial security in tough economic times, save money. Photo: Sazzad Ibn Sayed

“Generally, if you save some portion of your monthly income, you should try to continue doing so during inflation, because the long-term cumulative benefits will outweigh your short-term sacrifices,” Syed Zaman said.
“If you can’t set aside the same amount of money as before, set aside whatever you can for emergencies,” he added.

Budgeting is an important financial tool, inflation or not. However, budgeting well in times of inflation is especially important as it can ease the pressure on your wallet. By tracking your expenses, you will be able to give yourself more financial security, pay your bills on time, save money for uncertain times and, last but not least, enjoy a peaceful sleep at night.

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