Money Moves Singaporeans Make to Manage Inflation

Money Moves Singaporeans Make to Manage Inflation

The government is taking action to mitigate the effects of persistently high overall inflationary pressures and core inflation expectations that will soon exceed 4%.

As you are probably aware, inflation raises the cost of everything. While it is a typical aspect of the contemporary economy, a rate of inflation that is too high can have catastrophic consequences, including the collapse of the economy.

In this article, we will be taking a look at the reasons behind the latest rise in inflation, and discuss some money moves you can make to help moderate its effect.

1. Cut Out Unnecessary Expenses

Sort the essential and non-essential items on your list of expenses, subscriptions, and bills into two categories. Everything in the second pile should be thrown out; you may always subscribe to them or buy them once more when circumstances improve.

Don’t stop there. Examine your necessary expenditures to determine if there is a way to cut back on them. Perhaps you could change to a more affordable mobile plan or move to a shared or family plan for Netflix and other streaming services.

2. Cook more Home-based Food

We understand that ordering food online is a lifesaver on days when you simply cannot, yet the convenience and feeling of immediate satisfaction is exactly what makes you addicted. Additionally, in addition to the delivery fee, your habit is costing you more than you might imagine.

You'd be shocked at how much it can add up to at the end of the month if you sacrificed a little convenience and comfort for savings. Start cooking your own meals to cut costs or prepare more to benefit from economies of scale.

3. Lock your Mortgage Rate

Do you recall when central banks raised interest rates to reduce inflation? Your mortgage's interest rate will increase as a result, increasing your monthly payments.

Consider converting to a fixed rate mortgage if your mortgage is from a bank and your variable rate fluctuates in response to shifts in monetary policy. This will enable you to lock in the existing mortgage rates and stop your mortgage payments from rising further.

4. Lower Interest on your Debt

Other than mortgages, floating interest rates also apply to credit cards and credit lines. As a result, the MAS's increase in interest rates may result in increased interest payments on your outstanding debt.

Furthermore, if prices rise, you might find yourself using your credit card more frequently than usual, making it even more crucial to bring your debt under control.

Your revolving debt's interest rate has to be reduced. Consider taking out a personal loan to pay off your credit card debt before concentrating on making regular loan payments after that.

5. Make your Investments Work Better

Your purchasing power is reduced by inflation because everything else becomes more expensive. For instance, if the anticipated doubling in food inflation in the second half of 2022 persists unchecked, a S$3 plate of chicken rice will cost $4.45 in five years.

Long-term inflation management therefore revolves around accelerating the growth of your money. In order to maintain your purchasing power, your assets must generate an annual return of at least 4% if inflation stays at 4% annually.