Counter Inflation
Now-a-days my friend Rohit, working in Sales profile at Pune, prefers bike over car for office travelling. Lalit Rathi, a software engineer has cut down on his household expenses. With inflation, fuel & power price hike, urban middle class is finding ways to counter inflation. But inflation seems to drill a hole in one’s pocket. Household budgets have shattered, luxuries are being turned down & savings are diminishing. As per statistics, Consumer Price Index [CPI], which is a measure of general commodity prices, has risen 10.2% in August 2012 compared to same period last year. With inflation rocketing to new heights, middle class is finding ways to counter it. Smart spending, Efficient consumption & intelligent investing – the trio seem to be the basic answer to counter inflation & price hikes.
Smart Spending
Have you ever analyzed your expenditure? Most of us have. After deducting rent, food costs, EMIs & other necessities, we are left with few bucks. With inflation soaring, many people are putting an upper limit to their expenditures in various segments. Say, you put a limit of Rs.2500 on your clothing expenses. So the next time your clothing expenditure reaches Rs.2500, do not spend anything more on clothing unless you get your next salary. Similarly you can put a cap on other areas like food, fuel & leisure. Once you reach an upper limit, stop your spending on that segment. If you feel certain segment is always over-limit, then I guess you need to re-analyse your expenditures.
Super-markets are yet another opportunity for smart spending. Buying in wholesale gives you a cost benefit, thereby saving 10-15%. But beware not to fill your shopping cart with unnecessary commodities, as super-markets showcase them as alluring. If you analyze your monthly spending, & plan it, you are sure to curtail 10-15% of unnecessary expenditure.
Efficient Consumption
Most of you might have heard about car pooling. This is a concept being advocated by almost all IT companies. If you can find a group of people with same destination & matching times, you all can pool in a car & thus save on your fuel expenditure. With diesel price hike, it’s the best available option. Efficient consumption is not only limited to fuel. Using a 20watt CFL instead of 100watt electric bulb can save you around 30-40% on your power charges. Riding your bike at an optimum speed of 50kmph & regular servicing will increase your bike mileage.
These are just some of the ways of efficient consumption. If you look around & observe, there are many ways of efficient consumption, ranging from household consumption to your travel needs. Optimum use of available resources can help you shield against the growing inflation.
Intelligent Investing
Money grows money. Many of us keep money with our self. Or at the most deposit them in our saving bank account to grow at 5-6% annually. But have you ever wondered that inflation is growing much faster than that – to say, 10.2% this year. With inflation, value of money is depreciating, and so is the value of your saving account deposits. It is sheer lack of knowledge if one keeps money at his home or in saving bank account. With so many investment options available, you need to invest your money for it to grow in parallel with inflation. Investing your money is the best way one can counter inflation. Mutual funds, equities, fixed deposits, provident funds, stocks – there are innumerable options today available to invest your money.
Do remember to keep a diversified investment portfolio, so as to hedge against market volatility. Invest certain percentage of your savings in fixed return deposits, & do invest 10-15% of your money in fluctuating markets like Stocks. Sometimes it is good to take risks, as the returns are much higher in these segments. Don’t keep your money idle, as it depreciates in it’s over a period of time. You need to make money out of money to stay ahead of inflation.
Inflation can be tackled
Inflation, a general rise in commodity prices, clubbed with fuel & power price hikes is a burden on common man’s pocket. And with 10.2% rise, it’s high time that you planned your finances. Awareness is the key to counter inflation. Smart Spending, Efficient Consumption & Intelligent Investing is an overview of how to tackle inflation. People need to learn & start exploring new ways to offset inflation. So start your planning now.
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