Five Methods to Survive the Cost of Living Crisis

As a tumultuous 2022 draws to a close, Americans are looking wearily ahead toward the new year.

Recession fears are mounting. In October, a KPMG poll showed the vast majority of American CEOs expect a recession will hit over the coming 12 months. Monetary policy shows few signs of loosening either. Despite the real risk of recession, Fed Chair Jerome Powell earlier this month indicated he intends to keep on raising interest rates next year as he doubles down on efforts to curb inflation.

Fears of an imminent cost-of-living crisis were officially confirmed. Winter will be harsher this year, and Christmas will undoubtedly be a smaller affair for many families. January will hit harder as well, and we as a country need to become more creative with our finances to combat the cost of living crises. According to trading expert Samuel Leach, Founder of Samuel and Co Trading, there are five key areas consumers can focus on to get through this tough time.

Budgeting

When the economy is up, wages rise and money flows freely. During these good times, there is less need to detail every aspect of one’s financial life. However, when a crisis hits, careful and consistent budgeting can make all the difference. Spending plans should cover everything from weekly groceries to Christmas shopping. Making a detailed list of what you need throughout the month and assigning a certain amount to each category gives you control over where your money goes. Tracking expenses removes any doubt about exactly where your money is going and prepares you well for when unexpected costs do hit.

Minimizing Expenditure

Everyone has their own approach to minimizing expenses. It could range from swapping supermarkets, canceling subscriptions, bringing lunch to work, or buying one less drink on your night out. Regardless of your circumstances and preferences, a discussion about what is vital and what is not is certainly beneficial during these times. Cutting back on needless spending means you can save more of your disposable income. If you increase your cash pile, you’ll be better prepared to handle rising fixed costs of living like rent and utilities.

Rainy Day Fund

Ideally, most individuals will have savings before an economic downturn. However, not everyone has that luxury. It is possible to start now though or add to your pre-existing account. Even if you only save $10 a month, it will help in the long run, (especially if you put it in a high-interest account). For those of us lucky enough to have spare cash, put it away into your rainy-day fund. You never know when your car will break down or when the furnace will suddenly stop working in the middle of winter.

Rearrange Your Debt

Unfortunately, debt is a burden for too many Americans today. Although it’s nearly impossible to eradicate debt when the cost of bills and groceries are mounting, be sure to rearrange your debt to make it more manageable.

For example, if you are currently laboring under a high-interest-rate credit card and making small monthly payments, it is well worth your time to apply for a 0%-interest card. If you have a swathe of debt covering various accounts, then consolidating all these direct debits into one loan may be the way forward. Paying off your debt in single installments (rather than many different ones) gives you more control over the repayment process.

Save on Energy Usage

Saving energy within your household can also make an impact. For instance, you could ride a bike to work instead of using a car or train. In the freezing weather, soft furnishings such as rugs, blankets, and heavy curtains help keep the warmth in and hopefully reduce heating costs. If you do not always eat as a family, cooking facilities may be turned on at various times of the day. Try to change this and reduce your electricity or gas bill by only using these facilities at any one time.

It seems inevitable that costs will rise in the coming months. However, by getting proactive in the above areas you can save cash when it matters most. At times like this, small changes can make the world of difference to your financial health.

This article was produced and syndicated by Wealth of Geeks.

source https://wealthofgeeks.com/five-methods-to-survive-the-cost-of-living-crisis/