School gate conversations currently go one of two ways: either how none of us can get a break from seasonal illnesses – or how expensive a quick trip to the supermarket has become. In this article, you will find some great budgeting tips to try to cope with rising prices.
Food and energy are driving a global inflation surge and every one of us, regardless of where we’re based, is feeling the pinch. The International Monetary Fund (IMF) estimates that the average global cost of living has risen more since 2021 than it did in the preceding five years combined. This means that even if you stick to buying the bare necessities, you’ll be spending much more than you did a couple of years ago.
One of the best ways to beat rising prices is to draw up a budget – and do your best to stick to it. This ensures that you are spending only what you make with full awareness of where the money went. Because of higher prices, you may need to be more strategic in your planning, but this will also help you rethink your spending, all while potentially finding some spare money to save. In this article, together with Jesmond Mizzi Financial Advisors, we’ll share some tips on household budgeting to ride this expensive wave.
Our top budgeting tips:
Analyse your fixed expenses
This includes your rent or home loan, water and electricity, car insurance, and other expenses due every month which you can’t avoid. If the total is already out of your comfort zone and doesn’t leave you much leeway for other variable expenses (like food), see if you can shop around for a better value for money car insurance for instance, or decrease energy usage.
Differentiate between wants and needs
Look at your expense list objectively and divide into two columns: needs, such as food, and wants, such as eating out. Try to cut unnecessary expenses – preparing lunch at home is much cheaper than getting take away or running for a quick snack during a work break – and this includes coffee runs. It might seem like a few euro, but everything adds up. The same goes for subscriptions – Netflix, Spotify, Disney+… they’re all great to have rather than needs.
Allocate money at the start of the month
Every euro making up your paycheck has a role to play. Put away money for big expenses, such as car insurance, home insurance, an upcoming trip, or a beloved ARMS bill. That way, when a bill arrives in the mail, you’re all set and your spending power isn’t negatively impacted that month. As an example, let’s say your car insurance and road tax is €400 annually. Divide this into 12 or 13, depending on how many times you’re paid in a year, and transfer the amount into a dedicated bank account or Revolut vault on payday.
Build an emergency fund
Things happen when you least expect them. An emergency fund provides you with a cushion in the case of unplanned expenses, or a job loss. Ideally, anything extra at the end of the month should go into this emergency fund. There’s no one size fits all for the size of an emergency fund as it greatly depends on your lifestyle and the number of dependents. However, a rule of thumb is to put away at least three to six months’ worth of expenses.
Budget wisely for groceries
Food’s been hit by inflation and how. Set a monthly budget for groceries. Depending on the amount you allocate, it might be easier to stick to the numbers if you go for generic products rather than brand names. Meal planning also helps as you avoid impulse buys and food waste. When cheaper, use grocery stores weekly or monthly flyers to plan budget-friendly meals according to what’s on sale. Shop at the farmer’s market for vegetables at a much lower price and incorporate more low cost staple items in your meals, such as pasta, rice and beans for protein. Don’t go grocery shopping hungry, and try to avoid the snack aisle if it’s too tempting.
Do not neglect saving
It’s not the first thing that comes to mind when battling rising prices – and it may also feel like the wrong time to invest or contribute to your pension plan. However, regular contributions help you beat inflation in the long term. With Jesmond Mizzi Financial Advisors, you can start a savings plan from as little as €40 a month. That said, we all go through periods where it’s impossible to squeeze the budget any further. If this is the case, you can always pause your contributions or lower them until the situation gets better.
Identify other sources of income
Prices are rising, but salaries remain the same. It’s no secret that the cost of living in Malta has skyrocketed in the past years, all while salaries remained almost identical to what they were a few years ago. Finding ways to substitute your income can help you ride the rising prices wave. Here are some ideas to try:
- Sell things you don’t need anymore
- Find better paid job opportunities (if you’re up to it, of course)
- Take on a part time job or turn a hobby into an income source.
Review your budget throughout the month
Prices rise without warning. Apart from this, regardless of how thorough you are with planning, there’s always something unannounced that might crop up. Check in and make changes to your line items throughout the month. Sometimes, increasing one budget line and decreasing another is the way to go.
Rising prices make household budgeting trickier, and it can feel super frustrating to receive a salary only to see it vanish into thin air in a few days. None of us have control over economic conditions – but analysing your fixed expenses and your spending habits gives you the knowledge necessary to tweak your budget and ride this wave successfully.
This article was written in collaboration with Jesmond Mizzi Financial Advisors.
Jesmond Mizzi Financial Advisors Limited (C30176) is an enrolled Tied Insurance Intermediary under the Insurance Distribution Act for MAPFRE MSV Life p.l.c (MMSV) and Atlas Insurance PCC Limited (Atlas). MMSV (C15722) is authorised by the Malta Financial Services Authority (MFSA) to carry on long term business under the Insurance Business Act. Atlas (C5601) is a cell company authorised by the MFSA to carry on general insurance business under the Insurance Business Act. The non-cellular assets of the company may be used to meet losses incurred by the cells in excess of their assets. All entities are regulated by the MFSA.
Life insurance products are manufactured by MMSV. Jesmond Mizzi Financial Advisors Limited is authorised to distribute both long term products and general insurance products.