What is Inflation?

Over the last year, many of us have been faced with the pressure of rising prices – whether that’s energy, fuel, or the food we eat. This noticeable price rise is happening because of inflation. As a result of this, more of us are struggling to manage our money because our income simply will not cover the cost of living. If you’re faced with an unprecedented expense and your cash flow is already limited, you may be wondering where you can turn. A Payday loan direct lender UK can offer you additional finance when you’re faced with an emergency. Read on as we take a closer look at inflation and how it can have an impact on our lives.

Inflation: Defined

When we talk about inflation, we’re talking about the rate at which prices rise. Recently, we have seen one of the highest rates of inflation for many years, and there are a few reasons that inflation might happen. Because of the pandemic, companies are trying to make back the money that they lost when they couldn’t trade, which resulted in them hiking the prices of goods and services they provide, which has an impact on our pockets. Various socioeconomic factors are making it harder for us to get our hands on products that were once available, and where there is increased demand, the price then tends to skyrocket. Whatever the reason, inflation can have a huge impact on the economy. It can cause issues for businesses and make it difficult for them to survive in such uncertain economic times, which then has a knock-on effect on employment.

The Impact of Inflation on Our Finances

Inflation means the cost of goods and services rises, which means we have to try and make our money go further, when often, our pay doesn’t go up in line with this. This puts pressure on our monthly income and means we must rein in our spending.

Not only do we have to be more careful with our money, but it may also be more difficult for us to get additional finance in the form of a loan with interest rates rising to help manage inflation. Generally, we will be paying money for the same items – we might see the price of our weekly shop increase, as well as fuel and household bills.

How to Manage Inflation

Inflation creates a worrying situation for many of us, and it can be difficult to navigate if you’re not sure how. Thankfully, in times of rising prices and a cost-of-living crisis, there are things that you can do to make your money go further. Here are a few ways that you can manage inflation to help you cope financially.

Reduce Expenses

Reducing how much you spend each month is one of the best ways that you can manage your money in times of rising prices. You can use your budget to help you identify where you’re spending your money and if you need to make changes. For example, if you look at your outgoings and you’re spending too much on takeaways or eating out, cut down and cook at home. If you’re still paying for your gym membership each month when you rarely ever go, make time to cancel it. Although this may not seem like it’ll make much difference, you’d be surprised at how much cash flow you can free up monthly.

Budget

Creating a budget to help you manage your money is the best place to start. Take a look at your monthly income and subtract your outgoings. This allows you to see how much money you have left over each month.

You can also categorize your spending into primary and secondary expenses – your primary expenses are those things you can’t live without, for example, rent or mortgage payments, energy bills, or fuel for your car. The rest is your secondary payments. Take a look to see if there’s anything you can cut back on, which brings us to our next point.

Increase Your Income

This is one of the most obvious ways to deal with inflation, but it may not be so easy for many of us. Increasing your monthly income means you will be able to manage bills more easily. You could ask for a pay rise in your current role if you’re a good employee and you think you’re being underpaid, or you could apply for roles within the same sector that pay more. You could upskill yourself to help you increase your chances of getting a better-paid job, or you could even monetize your hobbies! There are many ways in which you can increase your income; you just have to choose a way that’s best for you.