Power of your purse strings


A visit to the market or grocery stores will make you notice that the prices of goods have risen.

INFLATION seems to be the buzzword around the globe these days, just as most economies are recovering after the disruptions caused by the Covid-19 pandemic.

A visit to the market or grocery stores will make you notice that the prices of goods have risen.

Of course the overhang of food security is a major issue that will further exacerbate by inflation. All this will put pressure on your purse if your income remains the same.

Inflation is when prices of goods and services rise and the money in your purse does not stretch as far as it used to.

Recently, the Statistics Department said that food inflation in April is higher at 4.1% with 89% of food items on the food and beverage group recording increases.

Persistent high inflation will certainly erode the real value of money and this is going to further hurt our purchasing power.

Rising prices have become a global issue and the war on Ukraine by Russia is threatening food security.

The United Nations Food and Agricultural Organisation Food Price Index, which tracks changes in international prices of commonly traded food commodities, rose for the 10th consecutive month in March to its highest level since 2014, a report said.

But in April, the index is down 0.8% from its all-time high in March.

What can one do to stretch your “purse” power so that you can ride the inflation wave that is upon us.

One thing to avoid is rushing to buy and store items in the hope of not paying more later.

That process will only drive prices higher as suppliers will try to re-stock as it disrupts their supply chain. That cost then will be passed back to the consumers.

There are many tips from experts on what you should do in an inflationary environment to save costs.

Manulife Investment Management (M) Bhd licensed financial planner Rajen Devadason advised that one should work from a written budget.

Rajen Devadason, a licenced financial planner with Manulife Investment Management (M) BhdRajen Devadason, a licenced financial planner with Manulife Investment Management (M) Bhd

“Substitute expensive goods and services for, ideally, better quality cheaper ones by researching and testing alternatives.

“Work harder than ever before, ideally moving beyond the typical 40-hour work week to take on additional part-time work, if needed, so as to lengthen work weeks to 50 or 60 hours and beyond.

“Use the extra money to replenish devastated Employees Provident Fund balances and to rebuild cash savings,’’ Devadason said.

He said you need to decide on what is important for yourself and your family. Do so by setting priorities.

Also set so-called posteriorities, which are very low priority wants that can be totally removed from your budget and thus your lives.

In terms of grocery shopping, find cheaper alternatives. But do not compromise so much on quality.

For that, you really need to do your homework online and make the necessary changes in your buying patterns.

If you have debts and loan repayments, do not miss on them as this will only pile up and cause more complications later if inflation is prolonged.

Devadason said working longer hours to make more money is a wise move.

But then choosing to spend that extra money is unwise.

“Instead, if the excess money is used to retire debt, then over time monthly cash flow surpluses will grow. These can then be channeled to retire yet more debt and to invest for passive income,’’ he said.

He added that over time, the advantages of working towards living with low debt or, ideally, no debt will become evident to those who have been previously weighed down by excessive consumer debt that has robbed them of choices, joy and peace of mind.

Online shopping is an option but the best approach would be to use multi-channel approaches to check on alternatives.

If you can’t take the heat of living in a big city with rising prices, then consider a move out to smaller cities and towns.

Devadason said the shift to hybrid work arrangements may make it appealing for some people to move away from expensive urban centres such as Kuala Lumpur and Petaling Jaya to cheaper places in the outskirts like Kajang, Nilai, Seremban and Port Dickson.

He also added that many older people opt to retire in places such as Kuantan, Ipoh and Taiping and, again, Seremban and Port Dickson, because of their relatively low costs and high quality of slower paced life.

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Economy , inflation , recession , purse ,

   

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