Over the past few years, we have gone from one crisis to another. First, Covid-19 laid waste to people’s livelihoods and entire economies. Then, just as we were finally getting back to work and accepting our “new normal”, the Russia-Ukraine conflict caused global inflation like we’ve never seen before.
The price of fuel, commodities, and energy, along with the resulting food price increases, look set to worsen in the coming months if a resolution to the conflict is not found. With every week that passes, the economic fallout is becoming plain to see, and the long-term outlook does not look good.
Beat the crunch
Inflation can be viewed as the worst form of tax, as the average person does not normally notice its impact until it’s too late.
We normally only feel the nasty choke of inflation when our cost of living exceeds our income. But in these uncertain times, there has been a lot said about inflation and the rampant interest rates are a hot topic.
But although we can’t control what happens with the war or the next pandemic, there are various ways we can counter inflation at home. In this article, we discuss a few of them – hopefully, they will help you beat the crunch.
Make a budget – and stick to it
When creating a simple budget, list your income and expenses. Try and be realistic and don’t underestimate – this can come back to bite you. Also, try and include a savings column and aim to put away at least 10% for a rainy day or smart investment (more on this later).
Another useful exercise to do now that you have all your expenses on paper is to go through your list and see if there is any way to reduce some of your expenses. After all, money saved is just as good, if not better, than money earned.
Saving starts at home
Think of your household as a business. You are the CEO that has the responsibility to make your business work. To survive in tough conditions, businesses always try to cut costs, and so should you. Here are some tips to beat inflation by saving money on expenses:
- Buy in-house or no-name brands – Don’t be proud – trade exclusive brands for in-house or no-name brands. Most of these are thoroughly researched and can be used without sacrificing quality.
- Search for specials – Look for specials but always remember to check the expiry date on perishable items.
- Save on energy – With rocketing energy prices, saving on your electricity bill has never been more important. Switch off unnecessary appliances and lights and reduce the use of your geysers. Buy some energy-saving bulbs and candles. A romantic dinner by candlelight is far cheaper than eating out.
- Rent out a spare room or building – You can also look into short-term rentals through a platform such as Airbnb. Always select your paying ‘guests’ carefully and ensure that you have a contract to protect yourself.
- Grow your own food – You don’t have to be a prepper or a farmer to grow your own food. Did you know that you can grow enough vegetables in a one-meter container to feed your family? Read up about seasonal vegetables. Go green. Store grey water or rainwater in a tank to water your garden. Make compost from your leftovers. Research how to get the maximum out of your little garden.
While these are tips to save you money in the short term, they may even free up enough funds to do what you’ve always planned to do: invest.
Make smartvestments
Being clever about where you invest your money can help it grow. The trick is to find somewhere to invest it that will give you a higher rate of return than inflation. Here is a short list of the types of investments you can make to generate a long-term profit:
- Bonds – Bonds are investments that are used by a government for specific projects. War and other forms of international conflict produce a great deal of uncertainty in the markets, which can turn extremely volatile. This can force investors into moving away from stocks and into government bonds. In this current climate, bonds can be a smart option as an investment.
- Stocks – These are investments that give you shares in a company or organization. In uncertain times like these, investing in companies that offer some sense of certainty in terms of stability and cash flows is more advantageous.
- Mutual Funds – These are considered by some to be a safer option as you’re investing in a company that invests pools of money in assets or bonds. Mutual funds are usually operated by professional money managers who make all the difficult decisions for you.
- Cryptocurrency and NFTs – These are investments in digital assets and tokens such as Bitcoin. Even in our current predicament, experts still believe that cryptocurrencies are the future. And if you’re a bit worried about it all going bang, a safe – but potentially less lucrative – option is to buy stocks in companies with exposure to cryptocurrency.
These are just a few ideas to hopefully help you save money and invest wisely. Life is unpredictable, so it always helps to have a plan B when it comes to your future.
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Disclaimer: The content of this article is not investment advice and does not constitute an offer or solicitation to offer or recommendation of any investment product. It is for general purposes only and does not take into account your individual needs, investment objectives and specific financial and fiscal circumstances.
Although the material contained in this article was prepared based on information from public and private sources that IXFI believes to be reliable, no representation, warranty or undertaking, stated or implied, is given as to the accuracy of the information contained herein, and IXFI expressly disclaims any liability for the accuracy and completeness of the information contained in this article.
Investment involves risk; any ideas or strategies discussed herein should therefore not be undertaken by any individual without prior consultation with a financial professional for the purpose of assessing whether the ideas or strategies that are discussed are suitable to you based on your own personal financial and fiscal objectives, needs and risk tolerance. IXFI expressly disclaims any liability or loss incurred by any person who acts on the information, ideas or strategies discussed herein.
