If you’re an ordinary citizen like me, you’ve probably felt the effect of inflation in the Philippines in the pocket — from the increased costs of gas to consumer goods. In the past weeks, I’ve seen people post about their grocery carts, which cost more but contain fewer items.
Inflation can bring uncertain times, and it’s normal to feel worry about this situation. In this article, let’s talk about practical tips that you can do to help survive inflation.
What is Inflation
Inflation is basically the rise of the prices of products and services over a period of time. Rising inflation results in the following:
- Reduced purchasing power. You need to spend more to buy the same amount of products as before.
- Lifestyle changes. You may need to switch to a simpler lifestyle to manage your budget.
- Lower savings. You may have less money to allocate to personal savings, even for important aspects such as health emergencies, child’s education, and retirement.
Inflation in the Philippines
There are many factors that influence inflation. Currently, there is global inflation due to the recent COVID-19 pandemic, the Ukraine-Russia conflict, and other events.
In the Philippines, inflation hit a new 4-year high last July 2022, leading to high commodity prices especially on food.
I often read about people dismissing the current inflation because it is happening worldwide. While this is true, inflation still tends to affect each country differently, due to different sociopolitical situation and economic policies. With this in mind, some financial advice may not apply depending on where you are living.
The same can be said for people living in the same country — households with high income have a bigger financial cushion than those who are struggling to pay the bills.
As a millennial, this is the first time that I’ve experienced living on my own and having to deal with inflation. What I learned from reading about it is that uncertain times are common in history, and the best way to get through it is to prepare and educate yourself.
There is no “magic” way to survive inflation, but there are steps you can take to diminish any loss.
Tips to Help You Survive Inflation
Now that we’ve discussed the basics of inflation, here are tips to help you survive.
1. Plan ahead
If you haven’t created a budget plan yet, now is the time to do it.
A budgeting plan will allow you to know your current income and expenses, help you come up with a financial goal (e.g., you want to start a good savings), and strategize how to achieve this goal.
List down your essential expenses on each month. This includes necessities like food, utilities, transport, etc. You can also spend this time to review which aspects of your budgeting have been hit the most by inflation (A good guess would be transport and groceries).
Now that you have this information, decide on a financial goal: How much you want to allocate toward savings? Or is there a specific amount you want to save?
Financial advisors suggest setting aside 20% of your income to savings or investment. It’s also a good rule of thumb to have an emergency fund that is worth 3-6 months of your income, so you have enough to cover you for bad financial times.
Having a budgeting plan is important to having a good financial standing and can also help give you confidence in times like inflation.
2. Grab the opportunity to invest
Inflation is actually a good time to invest in assets that rise in value alongside the inflation, such as stocks, real estate, or gold/silver. Others recommend cryptocurrency as well, but take note that while this can be more profitable than regular stocks, it is also highly volatile.
Don’t know the basics about investing? A good place to start is with finance books such as The Little Book of Common Sense Investing by John C. Bogle.
You can also talk to a financial advisor about options, such as opening a high-yields savings account so you can earn good interest. You can easily calculate estimated interests with online tools such as SavingsCalculator.org.
3. Be smart in shopping
Now is the time to take extra steps to save money when shopping in markets. Here are some easy steps that you can follow for smart shopping:
- Choose items on the lower shelves. More popular, expensive items are displayed in the top shelves, but oftentimes you can find the same-quality products on the lower shelves for less.
- Buy products in bulk. When the cost of goods is steadily rising, it makes sense to stock up. This applies for non-perishable goods (rice, coffee, sugar, etc) and other household items (soap, shampoo, toilet paper, etc). Check for cost per unit to see if you will also get bulk discounts.
- Compare prices online. Some products are cheaper when purchased online, compared to those sold in supermarkets and malls. Whenever we’re on the lookout for an electronic or household item, we usually check in Lazada or other online shops first since they are often cheaper by tens to hundreds of pesos.
- Patronize your local sellers. Shopping in large supermarkets is convenient, but it goes without saying that the prices at local markets are the best value. Another thing that you can do is look for direct suppliers from farms. Where we live, there are vendors for fresh eggs and fruits that source directly from farms, so not only are the products cheaper but fresher too.
- Avoid “budol” purchases. See an item you want online? Then add them in the cart and check back after a few days to decide if you still want them. Impulse buys can add up if kept unchecked.
4. Adjust your lifestyle
Many people like us have to adjust our lifestyle. This means cutting back on unnecessary expenses or “small” luxuries that stack up together.
My boyfriend and I used to order a lot from FoodPanda and GrabFood, but now we’ve started cooking more at home or buying cheap ulam from carinderias instead. We’ve also limited eating out to once a week, instead of 2 or 3x as before.
I’ve also avoided impulse buys, particularly clothes that I know I don’t really need. If I do need to buy something, I check Carousell because I can usually find it in brand or almost new condition for significantly less.
How are you adjusting your lifestyle to survive inflation in the Philippines? Let us know in the comments below.
5. Increase your cash flow
Here is a fact — the smart way to get through inflation is to increase your earning power.
The best way that you can help yourself is to invest in education so that you can have a skill set that will outpace the inflation. You may also want to explore diversifying your income by looking for side hustles — this will help you not only earn extra funds but also feel less vulnerable. Nowadays, there are a lot of jobs that you can do at home as long as you have a good laptop and internet.
If you already have a stable job, consider applying to a new company for a higher pay. Changing jobs is a tried-and-true approach to increase your salary faster than staying and waiting for a promotion.
What tips do you have for surviving inflation in the Philippines or other countries? Let us know in the comments section below!
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Katherine Cortes is a long-time backpacker and a freelance writer/editor. She likes beaches, snorkeling trips, and relaxing staycations (preferably with bath tubs!).