Central banks across the globe are preparing for economic recovery post lockdowns and restrictions. But inflation is rising faster and higher than hoped in some countries. The Bank of England’s (BoE) 2% inflation target has already been exceeded, with The Guardian reporting it could reach 3% by the end of 2021.
This means we would be paying more than expected for food, clothes and the cost of housing in the near future. If money has been tight over the past 12 months or if you’re trying to hang on to any COVID savings, there are ways to hold onto your money in the midst of rising inflation rates.
Kick your lockdown spending habits
As economies open up and normal life resumes, we need to be aware of spending risks. During lockdowns, we may have spent a lot more often online. Or we might have subscribed to luxury entertainment packages and services because there was nowhere else to spend our disposable income.
The Los Angeles Times reported that streaming service subscriptions topped 1 billion in 2020 as more of us were kept glued to our sofas.
But as lockdowns end and we spend our money at restaurants or retail stores, we may need to withdraw from our lockdown spending habits. Maybe it’s time to cancel that additional movie streaming service you signed up to? Or maybe it’s time to opt out of your lockdown grocery and meal plan delivery service?
Start using a budget planner
When the places you spend your money changes in a post-COVID world, it’s time to update your monthly budget to reflect this too. i.e. are you aware just how much money you gave to Amazon over the last few months? It’s never been easier to buy with one click and remove the last remaining shred of the concept of physically ‘paying’ for a product with your cash.
If you don’t already use a budget planner, it’s the perfect time to do so. Loan provider Wonga published a free financial guide to budgeting and cash flow management which includes a free-to-download Excel budget planner. This free budget planner also comes with top tips to create a budget and save money on everyday expenses. We recommend checking out their content here to get informed.
Be aware of price gouging
Many businesses will try to recover what they have lost over the last 18 months, meaning small and large businesses will be putting their prices up in order to compensate themselves. Many buyers will not begrudge this, especially when it comes to independent local businesses. But big global companies may try doing the same.
The travel industry is one industry that may be hiking prices higher than others, considering airlines have been massively affected by the pandemic for its duration. You may want to save by choosing to holiday at home this year. You will avoid inflated flight prices, COVID tests and the stress of travelling at the moment.
If you opt to holiday at home instead, remember to book staycations well in advance or face the same inflated prices minus the COVID testing.
