Inflation is an unavoidable occurrence. It’s either fast, slow, or somewhere in between. Even with our current economic downturn. As the Philippines continuously experience the adverse effects of inflation the rising price periods can be unpredictable, and there is no way to anticipate how high inflation will rise or how long it will remain. You can take certain ways to beat the worst effects of inflation. You might begin by reviewing your short- and long-term financial plans to see what changes you may need to make. Higher inflation may necessitate postponing a home repair project or spending your holiday at home rather than traveling. Or it could necessitate something more drastic, such as taking on a second job or creating a side business. Moreover, one of the best strategies to prepare your portfolio for inflation is to diversify it and invest in assets that have historically outperformed the rate of inflation.
Read Also: What is the Impact of Inflation on Interest Rates?
How to beat Inflation?
1. Create a Budget Plan
One of the ways to beat inflation is by planning your budget. We frequently think of budgeting as a one-and-done task. You sit down with your receipts and accounts. You calculate how much you have spent and saved. Furthermore, you budget for how much money you will spend in the future. The greatest method to ensure budgeting success is to accept that budgeting will be a continuous strategy you will use to live the financial life you desire. Instead of viewing budgeting as a one-time or occasional chore, consider it a regular maintenance task, similar to cleaning your laundry.
Laundry, like money management, is an ongoing responsibility that cannot be avoided, ignored, or neglected without major consequences. Going into your new budget with the understanding that you are committing to a regular and continuous procedure can assist you in maintaining your budget, which is far more important than simply generating one.
2. Barter, Buy Used, and Exchange
Consider purchasing used things; you can often get fantastic offers at a quarter of the original price. Books, games, sporting goods, furniture, apparel and accessories. Everything you may need is available on various social media platforms such as Facebook Marketplace, Carousell, Olx, and Twitter.
Another alternative is to borrow or rent. Borrowing books, periodicals, and newspapers from the library can result in significant savings. There are also art libraries that lend out artworks for a few months at a time. You can modify the look of your home without breaking the budget. If you have specific items that you need but will not be needed for a long time, try borrowing from a neighbor who may have the hammer or drill you require. It’s an excellent approach to save money and lower your consumption. After all, neighboring is what neighbors do.
3. Declutter your Home
Having more items around shouldn’t be a problem, right? After all, you paid for it, so why not retain it? Though this argument makes sense, it may be more helpful to get rid of the unnecessary things in our home. Clutter makes keeping your place neat difficult, and it can also cost you money.
Decluttering your home may not have a direct impact on how to beat inflation, but it has its benefits. Clutter can encourage you to buy duplicates of items, prevent you from seeing an item’s potential value, and force you to pay exorbitant storage fees. These difficulties can have an impact on your purchasing patterns. Aside from forgetting what you already have, it’s difficult to use what you have if you can’t find it among the clutter. When you need a culinary item, for example, it makes little difference whether you already have it if you can’t remember where you put it.
4. Increase Income
One of the most serious issues with rising costs and inflation is that wages do not keep pace. Another way to beat inflation is by increasing your income. Finding strategies to boost your income will help you get through and budget for periods of prolonged inflation. Among the possibilities for raising revenue are:
- Selling items you no longer require
- Trying to negotiate a raise with your current company
- Changing jobs for a higher salary
- Taking on a second or part-time job
- Begin a side hustle or a side business
- Generate more pasive income
Each option includes advantages and disadvantages, as well as risks and benefits. However, increasing your income may be one of the most effective methods to protect yourself and your budget from the effects of inflation over time.
Read Also: Best Ways to Earn Passive Income
5. Invest in Gold
For some, periods of rising prices may appear to be the worst moment to invest. Why would you invest in the stock market when your monthly expenses are rising? How do you beat inflation with that?
Here’s a better way to look at it: Whether you’re investing for retirement or other goals, you must maintain consistent contributions regardless of what’s going on in your financial life. After all, beating inflation by maintaining and improving the purchasing power of your funds over time is one of the primary reasons to invest in the first place.
However, if your budget is tight, consider lowering your payments in the short term. Just make sure to restore and potentially increase payments once the strain is relieved.
Gold is a physical asset that retains its value even during periods of excessive inflation. Furthermore, gold can outperform the rate of inflation in terms of capital appreciation. However, keep in mind that commodities are a more volatile investment and hence carry a larger risk.
6. Invest in Stocks
Over time, no other investment type has outperformed the stock market. When compared to gold, cryptocurrency, real estate, and fine art, the stock market has consistently delivered decade after decade.
To outperform inflation, you should earn at least 2% every year. There are several options for doing so, including starting a business, investing in real estate, beginning Forex trading, investing in startups, and so on.
All these things necessitate time, effort, and knowledge. Property management is not a passive activity at start and requires a significant investment. Cryptocurrency and Forex trading necessitate extensive expertise and market updates. Investing in startups and establishing businesses are likely the most time- and energy-intensive. But what about stock market investing? You can program it and then forget about it. You can set up automatic monthly payments and never look at the market again. You don’t need any upfront capital or specialized knowledge.
7. Invest in Real Estate
The final way to beat inflation is through real estate investment. Real estate investments are sometimes regarded as inflation-hedging investments. Let us look at real estate as a strategy for combating inflation and generating income flow now and in retirement. Inflation hedge investments are often assets that are projected to gain or at the very least maintain their value over time. This relates to three factors that make real estate an excellent instrument for combating inflation: increasing value, increasing revenue (rents), and declining debt.
If you want to invest in real estate, Bria Homes is the greatest alternative because it will provide you with future income flows through capital appreciation of your assets. Bria Homes is committed to provide every Filipino with an inexpensive house and lot.