Home Budgeting How to Cope with Cost of Living Increases

How to Cope with Cost of Living Increases

by James McGregor

The cost of living does tend to increase with time, but there are occasions when it seems to steeply increase and perhaps increase more than wages. This means that it can be difficult to cope and means that you may have to take measures so that you can manage better in this sort of situation. There are different options that you can try which might help you out. Everyone has a different lifestyle so it will depend on how you live, as to what measure you may need to take. 

Cut Back on Luxury Spending

Most of us are fortunate enough to have enough money to afford some luxuries. The type of luxury will depend on our income but could be anything from buying coffees from a coffee shop to round the world trips. It is worth identifying the luxuries that you buy so that you can cut back on them. A luxury is something that we can live without. So, this means that it will vary between different people as we all have different sized families and different needs. It can be wise to look at a bank statement to work out what you buy and which items are luxuries or you could write down the items that you are buying. It can be worth just thinking about every purchase and asking yourself whether you really need it. However, some items we buy on subscription and so we will need to look at bank and credit card statements to check those out as well. You may even find there are things you pay for that you do not use and then you will easily be able to eliminate those.

Repay Minimum on Bills

For some bills that we pay, we can choose how much we repay. For example, with a credit card, we will only have to repay a minimum amount and we can owe the rest. However, we will have to pay interest on the remaining balance and so this cost will add up. It might be worth doing this if you have an emergency situation, but a cost of living increase is likely to be a long term thing and so it is worth trying to find a less costly way to cope. With your utility bills, water, gas and electricity, you might be able to adjust the amount that you pay each month. Some companies will allow you to build up some debt and this could help you through a period like this. You will need to talk to them about it, in most cases and explain that you need some temporary help and it is likely that they will reduce your repayments. Some of them even have hardship funds and you might be able to get some financial help if your circumstances are really tricky.

Borrow Money

Getting a loan will mean that you will have more money to spend. However, it is not always a good way to manage, particularly when you are coping with cost of living increases as these are likely to be permanent. You will have to repay the loan and it will cost you more money than it would, had you managed with what money you had. They can be good to help you out if you need money for an emergency, but if you just need more each month, then borrowing can end up making the situation more difficult in the long run. You may also find that as the cost of living increases, so do interest rates and this will mean that loans are more expensive. It can be best to avoid doing this If you can. 

Get a Better Paid Job

If you can, then finding a way to make more money can help a lot. It is possible that you will not have a pay rise, as these seem to be quite rare. This means that your pay will not go up in line with the cost of living increases and so you will need to find a different way to make more money. The easiest way is to try to get more money from the work that you are currently doing and this means asking for more hours, overtime etc. If you cannot get this then looking to work for another company could be a good way to get a higher wage as you should be able to negotiate a salary. It isn’t easy to do this and if you are happy in your job, then you may not want to move. You may therefore need to think about whether you need to see if you can do something in your spare time to earn some extra money. Some people choose to monetise their hobbies, but this will mean that there is a risk that their hobby is no longer fun any more because they are relying on it for income. However, it could be possible to take on a second job or to find other ways to earn. There are online opportunities to earn from home and although they may not pay that well, they should all help. It is worth seeing what is available.

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