The cost of living has been on the rise globally, and there are no indications that it may go down soon. It calls upon us to learn workable tricks to survive this economic turbulence. We must learn the best tricks to save and invest wisely.
Saving can be painful, but if done, you can open doors to investment opportunities. But what are the most effective money-saving and investment tricks? Before tackling this question, let’s briefly describe what has caused the high cost of living.
Rising Energy and Fuel Prices
The COVID-19 pandemic caused a significant slump in oil prices, leading to a drop in the price of energy and cost of production. That explains why, despite low productivity at the time, the cost of living did not hike. Despite COVID-19 infections decreasing, there has been a substantial increase in oil prices globally, adversely affecting the global economy. This increase is caused mainly by the escalating war between Ukraine and Russia. Gas prices have also hiked, leading to suffering for the low-income earners in major world economies.
The lock-down during the pandemic has contributed to the goods shortages experienced in the last two years. The pandemic caused a significant decrease in the importation of raw materials, leading to slow productivity in the same period. Compounded by the recent Ukraine war, the manufacturing industry has significantly suffered.
The low stock of essential goods has led to the sudden rise in prices worldwide. With oil prices on the increase, the cost of production will continue to shoot, resulting in the high cost of living.
Shipping costs have also increased, causing a delay in the movement of goods, resulting in global empty stores. With the high oil prices, the transport/shipping sectors have had to contend with higher energy costs, further pushing up the price of goods.
Airfreight fees also increased in the last two years, further skyrocketing prices of goods. Europe recorded a scarcity of track drivers, further dipping the prospects of the transport sector.
The high cost of living that came with the COVID-19 pandemic led to the mass exodus of the workforce, leaving employers with a huge gap to fill. They have had to contend with the increased wage bill and other incentives to attract a new workforce. With the rampant inflation pushing down business returns, the situation is sad for most employers.
The world economy is also grappling with the extreme weather that is continuing to wreak havoc in many parts of the world. For instance, the oil supply took a downturn when the Gulf of Mexico was hit by hurricane LDA, damaging the American oil infrastructure. The resultant increase in oil and energy prices has led to higher costs of production and high food prices.
Higher import costs do not spare either. With barriers such as high import costs, the cost of essential goods can only increase.
The End of Pandemic Support
We have been witnessing governments withdraw their support given to businesses to help with the impact of the COVID-19 pandemic. Such withdrawal exposes private businesses to harsh economic times, leading to poor production.
The factors mentioned above have played a significant role in increasing the cost of living in many parts of the world. Faced with this sad reality, what can you do to secure your saving and investment plans?
Pay Yourself First
When you have financial constraints due to inflation, you should develop the financial discipline to wade through. Set an amount you want to save and make an immediate deduction when you receive your pay. With time, it will become a pattern and part of your spending.
Some banks have standing order systems that automatically deduct a specified amount to a savings account. You can plan with your banker to affect your savings automatically from your bank account.
Save for Emergencies
Emergencies are events we encounter over which we have no control. For instance, you can lose your job unexpectedly. Worse still, a family member may face a major illness and have no health insurance to cover the costs. Such conditions need special savings accounts set aside for such emergencies. The general rule is to save what can meet your household’s needs for six months.
Create a Spending Plan
It is good to create a monthly spending plan. A spending plan, if strictly followed, will help entrench your spending pattern and has numerous benefits. It will help you stay clear of impulsive spending, set optimum monthly spending and give room to saving.
Spend Less, Save More!
If you can, spend less and save more. Is it possible to save more and spend less? Yes, indeed! All you do is look for different ways of cutting down your budget. For instance, you can decide to do your shopping for basic needs in less expensive local shops instead superstores. You can also find cheaper replacements for some products so long as they can serve the purpose.
Create Other Tunnels of Making Money
The technological age presents us with rare opportunities of making money online. You can start a blog and make money by monetizing your blog. Some people think that it is hard to start a blog. It isn’t at all! All you need is a domain name, hosting plan and a niche in which you are an authority. For example, if you are a teacher, you can start a blog on education.
Save as Little as You Can
If things are too hard, you can save as little as us$1. Don’t look down on what you can do. You may never tell what you will have saved in 10 years! Furthermore, things won’t remain static, so don’t kill the effort.
When it comes time to invest, you should do so prudently. It is significant to note that some investments can be very lucrative but are either volatile or expensive to start. When choosing an investment you should base your choice on three factors;
You should choose a viable location for your investment. Some businesses can perform better in one area and not others.
Some Businesses can be lucrative but carry a huge risk. Is the risk involved commensurate with the expected returns from the investment?
Personal financial position
The type of investment you want to start also depends on your financial strength.
To effectively make the best investment decision, you should do the following:
Understand Investment Costs
Whatever investment you have decided to pursue, you should think of the costs involved. Are the costs executable or are they out of reach? Also, think of the particular elements you will have to bear in the process of financing your business. All these expenses should be available if the investment is to succeed.
Stick to an Investment Plan
Once you should an investment opportunity stick by it. Some investors have lost millions of dollars to Get-Rich Quickly Schemes because they failed to stick to an ongoing investment plan. Do what you know best and you make fewer errors.
Ask for Help
If you are not sure about your investment strategy, don’t be afraid to ask for help. Sometimes it is more prudent to seek professional help than to risk your money.
Starting a business during this post-covid-19 period can be challenging but it is also the time to ensure you execute your dream. The longer you wait the harder it becomes to succeed. Saving for your future and your family is too significant to gamble with.