5 unconventional ways to protect yourself against inflation
With inflation, it’s the daily expenses such as food, fuel and energy where consumers feel the pinch. And inflation is on the rise, forecast to reach 1.3% in 2018, up slightly from 1.1% this year. While many people will see a salary increase as we head into the new year, its effect will be crimped as costs creep up. ECA International, an HR firm, predicted wage increases of 4% for 2018 in Singapore, yet after inflation the real uplift will be closer to 2.7%.
While you can’t change inflation, there are simple ways to protect the dollar in your pocket. Here are some everyday measures you can take to soften the impact of price rises:
1) Learn to love the Land Transport Authority
Fuel is expensive, and over the course of the year it all adds up to a hefty bill. According to some reports, people spend around S$2,600 a year just on petrol,1 before you add on the other costs of car ownership, such as road tax and insurance.
Taking public transport could slash your costs in half. A monthly travel card costs S$120, or S$1,440 a year – a big saving from the average annual fuel bill. Taking more bus and MRT rides would also mean you are on trend for 2018, as the country has designated it the “Year of Climate Action” for Singapore. So take a leaf out of the government’s book and get on board with public transport to save money and the environment.
2) Negotiate your salary
Notwithstanding the expected salary bump some employees may get, if you’ve been consistently hitting targets or taking on more responsibility than your job description sets out, 2018 may be the year to ask for more.
If you’re overdue for a pay rise, set up a time to speak with your manager to discuss the issue. Make sure you do your homework beforehand to make it easy for them to say yes: list all your achievements over the previous 12 to 18 months, targets reached and other ways in which you have contributed to business growth. Research can also help your case: find out the salary brackets for someone in your profession and your experience in Singapore to see whether you are on the right track. If your company can’t give you a pay rise straight away, at least find out the timeline – and what you need to do – to get there.
3) Checkout deals
Inflation does not affect all goods equally. In fact, the cost of food rose faster – at 1.5% between September and October 2017 – than the general rate of inflation. This higher pace of price rises held true across all food types, from cheese and dairy to fish, vegetables and fruit.
Explore ways to bring down the cost of your basket by using price comparison websites, such as diffmarts.com, to secure the cheapest deals for your groceries.
4) Be a green guru
Save energy costs by keeping an eye on your consumption. In our hot and humid climate, we all know air-conditioners make up a fair chunk of a household's electricity bill. Put the air con units up a notch and see your bills go down. You could save S$25 a year for each degree warmer you have the air con, according to the National Environment Agency; the agency recommends setting the temperature at about 25˚C. You can even make further savings by ditching the air con all together – a fan uses one-tenth the amount of electricity. Other handy tips to conserve energy include switching off appliances when you don’t need them – standby power accounts for up to 10% of home electricity use – and making sure you wash a full load on laundry day.
5) Give your assets a workout
Make your existing assets work harder, for you. When your account is really feeling the crunch, it may be time to consider more unusual ways to bulk up your bank balance. One option is to refinance your home loan. This is not a decision to be taken lightly. Still, it can unlock money each month if you find a provider offering lower interest rates than you pay currently. Make sure to read the small print of both existing and potential provider to understand (and evaluate) any costs involved, such as prepayment penalties, cancellation fees or legal charges.
Another option is to try and inflation-proof your savings. Check the current interest rates you receive on money squirrelled away and what that translates to accounting for inflation. Saving plans are a great way to protect yourself and your family against unforeseen price increases. Finally, diversify and see if other investments, such as gold for instance, give you good returns.
For more ways to get you ready for your life ahead talk to a friendly financial planner from Manulife Singapore today.