3 things you need to do to combat high inflation

The inflation rate in Singapore is 5.4% for the month of April 2022. Below shows the graph of Singapore annual inflation for the last 31 years from 1990 till 2021.

The last time inflation was so high in Singapore was around 10 years ago in 2011. I’m pretty sure most of you should have felt the effect of inflation in your everyday life. Starting from the price of petrol, for those who drives, to the price of chicken and eggs, we are seeing significant price jump in them during the past few months.

Unfortunately, US just posted that their consumer price hit a 40 years high at 8.6% in May 2022 from a year earlier. It doesn't seems like inflation is going to come down anytime soon and it might even get worse for all of us in the near future.

So what are you going to do about it? For me, there are 3 things that I think we all need to be doing to cushion the impact of inflation.

First, right size your spending.

Right size your spending simply means to really evaluate and understand what you need to be sufficient and happy. It's not about scrimping and savings every cents and making yourself miserable.

For example, do you need a 1Gbps broadband or is 500Mbps broadband more than sufficient for you to get your work and entertainment done effectively? Do you really need the latest Samsung S22 when your S21 if still working fine? Does the extra 500Mbps or S22 really make a difference in your quality of life for the price you are paying?

I could go on and on but you get the gist. Once we really spend the time to know what we are spending on and know what we really need, we can start to trim off the excess and be more efficient and effective in our spending.

You can start by looking at some of your recurring spending like insurance payment. You can take a look at your policy to make sure you are not paying more than you need. I did my insurance policy clean up awhile back here.

Also recently, I re-contracted my mobile plan and nope I didn't go for the cheapest SIM only plan. I took a look at my needs and went online to compare what are the best available offer and eventually I went with M1 on a 2 years contract that comes with a phone. My monthly subscription fee for that contract was not cheap at around $35 (with corporate discount) for 13Gb/month with up to 3Gb for roaming. This plan meets my needs as I have not used more than 10Gb/month before and the 3Gb of roaming will come in handy especially now that the world has more or less opened up. To defray the monthly cost, I sold the subsidized phone (Yes, the current phone I'm using now is still doing well) I got from re-contracting on Carousell and got around $450 profit. This reduces the monthly bill for the 2 years contract period to around $16/month which is comparable if not cheaper than some of the Sim only plan.

Right size your spending is not going to be easy. You will need to be resourceful and also put in some effort to find lower cost alternatives that meets your needs. With the internet, it is really getting easier to find and compare prices of products and services. It’s just finding the time and putting in the effort to do it.

Secondly, maintain your income and look for opportunities to grow your income.

This means continue to work hard and hopefully making us less dispensable to the company. Also continue to look for opportunities of growth in the company and also on the side. For me, I'm doing a part time diploma course sponsored by my company to grow my technical knowledge and hopefully contribute more to my job. On the side, I'm also working on other sources of income and you can read more about it here.

Lastly, save money and invest them.

In a high inflation environment, we should not keep our savings in the bank and let inflation erode away its purchasing power. However, do make sure you have sufficient emergency fund (typically 6 months of your monthly expenses), adequate insurance coverage and CPF safety net built up before investing the rest. You can take a look at some of my previous post on investing here. For the more risk adverse, you can look at the Singapore Savings Bond. Although the interest rate is not beating inflation, it definitely beats keeping your money in the bank.

It is going to be tough for many of us during such times... but remember tough time don’t last, tough people do... if you take the effort to get your finance straighten out, you are going to emerge from these tough time in a much better position. 

Thanks for reading and do support me on my referral page. Stay Safe and Happy Savings!