As parents, we may often worry about how rising prices will affect our family’s wellbeing and happiness.
Money, after all, makes the world go round, unfortunately.
As inflations come and go, our income may remain stagnant.
Prices of things and services skyrocket and we are slowly losing the ability to afford them.
That’s why it’s always to think about the future, and how we can continue to provide for our family, without spiraling into abject poverty. Or juggling multiple jobs and side hustles.
At the end of the day, it’s not about striving for ostentatious wealth, but a considerable rainy day nest egg that can keep you and your family financially afloat for years on end.
Here’s how to start planning for the next inflation.
Commit to a Savings Plan
Financial experts always advice us to start a savings plan. But many of us may not even know what that is.
In simple terms, a savings plan is simply a way of optimising your spending to better save more money, i.e. creating a budget.
In a previous Money-Smart Mama episode, financial expert Ritchie Lim proposes using the ‘6 Jar Method’.
It involves allocating percentages of your monthly income to 6 specific category of needs. 30% for rent/mortgage, 20% for household needs, 10% for entertainment, etc.
This ensures you never go over your budget. Money tracking apps can also help with this.
Maintain Your Financial Health
We may often think we have healthy spending habits, and that we manage our wealth adequately.
But if you really take a second to track your expenses, this may often be the opposite.
You may end up with outstanding payments, installment contracts, student loans and goodness knows what else.
So, ensure that you take care of these first before adding more responsibility under your belt that you can’t afford.
This means no taking out personal loans unless absolutely necessary.
And most importantly, no credit cards.
Not unless you want to accumulate life-ruining debt (plus interest) and possibly getting blacklisted for years.
Live Below Your Means
Make a habit of always being thrifty.
Avoid going out to lavish restaurants or going on ridiculous shopping sprees.
Learn to make artisan coffee at home using cheaper ingredients instead of buying your daily cup of coffee each morning.
These expenses will often pile up without you noticing. Especially if you don’t have a savings plan to track where your money goes.
Which is all the more reason to start taking your finances seriously, especially if you want to save enough to survive the next inflation.
Stick to Fixed Rates
Fixed rates arrangements refers to payments or fees that stay the same despite any currency fluctuations.
This means you still pay the same amount of money for the same level of service.
Which can be something people overlook when signing up for loans, installments, rents or mortgages.
Many (unethical) people may raise their charges during inflation to maintain profit, which means more expenses from your end.
But with a fixed rate contract, they can’t willy-nilly raise prices, not without incurring some legal repercussions.
Try Some Investing
You’ve probably had many close acquaintances and family members recommend ASNB, ASN, ASM, etc. Those popular investment options that everyone seems to swear by in recent years.
Unfortunately, these long-term investments don’t offer fast profit, or overnight wealth.
You’ll need to wait 5 to 10 years to truly see any money being made.
But most people take this as win and just sort of forget about the money as something they can enjoy in their retirement years.
However, for many of us, this is not very practical.
You can of course, play with stock, bonds and even gold, but these are relatively high risk, labour intensive and time consuming.
If you want more immediate returns on your capital, you can try Forex (foreign exchange trading).
But keep in mind, these investment strategies do come with a steep learning curve.
So, remember to do your research and start small before cashing in on thousands of ringgit.
Preparing for the Future
Having enough money for the future means that you don’t have to sacrifice comforts and luxuries.
But some of us may often misunderstand what those things mean.
It’s not weekend getaways to the Bahamas or 10-course 5-star meals.
It can be as simple as running water, electricity, air-conditioning, a nice house, working Internet, good clothes and petrol.
Yes, those are luxuries as well.
Important, every day things we may take for granted until an inflation rolls around and we start to really buckle under the weight of rising prices.
So, prepare in advance, mummies and daddies!
There will be plenty more inflations in our future; let’s plan ahead so we can weather through them in one piece.
Disclaimer: The information provided in this article is for informational purposes only and should not be considered as medical advice from Motherhood. For any health-related concerns, it is advisable to consult with a qualified healthcare professional or medical practitioner.
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