‘There must be a cheaper way’
We need different strategies to cope with continuing high inflation
Inflating is biting. It has been high for more than two years and prices of goods and services we buy have gone up and up. For many people it means going without essentials, and/or discretionary spending.
I raised an eyebrow at a Reddit post showing the $2 Shop had allegedly become the $5 Shop. “Allegedly” because although the $5 Shop logo looked genuine I couldn’t verify that it wasn’t a fake. Even so, there was a grain of truth in the idea that the $2 Shop could soon become the $5 Shop.
Most people born after 1970 have never experienced high inflation in their adult lives. It’s a shock, and navigating it requires a new set of skills.
The first trick is to work very hard at increasing income. Inflation doesn’t matter so much if your income is keeping pace with it.
Thanks to record numbers of new migrants entering New Zealand over the past year, employers are not under as much pressure to raise wages and salaries to compensate for price increases as they were in 2022 and 2023.
If you need a pay rise, don’t take the first “no” for an answer. Put together a case, and if that fails look for a better paying job.
Other options for increasing income include setting yourself up for promotion, doing overtime, getting a side hustle, or finding ways for a stay-at-home-partner to earn income.
The next strategy is to create a budget and make the most of whatever income you have.
Planning how you will spend your money makes it go further. It also changes the way you view spending on nonessentials. That can become something to look forward to.
Another good strategy is to pay down consumer debt to reduce interest repayments. If you’re budgeting you will most likely free up money by prioritising other spending.
Being mindful about prices is a good strategy. That means stop and think before spending. Sometimes the item is essential. Other times it can be forgone or substituted after a bit of thought. Even with essentials.
I’ve had a mantra for years: “there must be a cheaper way”. That is sometimes followed by: “do I really need it?”. Sometimes of course there is not a cheaper way or you do really need or
Most people born after 1970 have never experienced high inflation in their adult lives. It’s a shock, and navigating it requires a new set of skills.
want the item in question.
But pondering these types of questions can make the desire to buy go away or identify more cost-efficient alternatives.
Inflation can help focus the mind on shopping around. When I noticed the price of a thali at one of our favourite Indian eateries had topped the $20 mark, I was motivated to check out alternatives.
We now have a new favourite thali restaurant, which costs us $12.99 to $14.99 per person.
The other thing with inflation is that if the price rises beyond a certain threshold it has the effect of stopping me in my tracks. Just as the thali did. That can lead to not buying the item at all.
Case in point was when a cafe wanted to charge me $7 for an oat latte, and I chose to do without instead.
I know it’s an unpopular concept, but some things we convince ourselves are essentials, just aren’t. One of the biggest drains on our finances is supermarket shopping.
A lot of what finds its way into our trolleys is non-essential. Especially if you’re not meal planning.
I’m not just talking about fancy cheeses, and trendy sauces. Even out of season vegetables fall into the non-essentials category. When capsicum was $15kg in July last year I wrote about just this.
You can still both budget and enjoy non-essential items. They just need to come under different categories, such as treats, or his’n’her pocket money.
It’s always important to be honest with yourself about money. Are you making excuses? We all do.
I might tell myself that some of my spending is good for my soul. But if making ends meet is hard, a walk down the beach, or picnic, is just as good or even better than buying a thali, oat latte, or whatever your own personal financial black hole is.
If you feel that nothing works, then it might be a good idea to visit a financial mentor. The service is free and a mentor can be sourced through Money Talks. The mentor may send you back to the steps above.
But having someone looking at your personal situation and backing you up when it gets tough can really help.