Sometimes there is a silver lining in a crisis. Ongoing inflation has made me reassess spending. Like most people, I’m at risk of lifestyle inflation. Erstwhile luxuries somehow become twisted into “necessities”.
Rampant inflation is a timely reminder about mindless wasteful spending. Cut to one Friday night in late April when I rushed to the ferry on a Friday night to get to an event in town. As I sat catching my breath, I realised I’d forgotten to eat anything for dinner and wasn’t going to last the night without becoming grumpy.
My natural reaction was to start calculating the logistics of picking up sushi, kebab, noodles, or something else, which would have no doubt set me back $10.
Realising it was just to fill a hole, I had a Back-to-the-Future moment doing what I would have in my 20s. I called in at a dairy and bought a banana for 60c. It both tide me over until I got home later and was a timely reminder of just how much money is thrown away on takeaways to eat for the sake of it. I also felt like I was giving two fingers up to that tax that is inflation.
Overcoming inflation needs much more of a plan than buying bananas. If you have consumer debt, try to double down first if you can on that with the highest interest. Ruminating,looking for alternatives to whatever your existing narrative is and creating a budget for the times isn’t a bad way to get started in creating a new plan.
Countering inflation and ultimately becoming comfortably off requires action on all fronts. Earning more, spending less, saving more. $1 at a time. Having a goal such as buying a home can help, providing you budget around it.
I’ve been having conversations with my adult-in-training children about the daily sacrifices you need to make to be comfortably off.The more of their income that can end up in inflation countering investments, the better.
One of those sacrifices is working hard in a job to build up initial capital, no matter how boring. As professor Scott Galloway said in the NZ Herald’s Great Minds series recently: “Few people develop economic security without working their asses off for 10-20 years.” That’s what you have to do to build up some capital to begin with, although finding a better-paying, less-boring job is a good ambition to have.
Investing in yourself can pay in these times. We all hear that workers are in short supply. Those jumping ship have a good chance of increasing their income. If it doesn’t work for you, study or build skills in your existing job to move up to the next level. I once interviewed a single mum who started work as a part-time school cleaner, but worked her way up to regional manager at OCS, by always asking the next most senior person to her how they got their job.
Food may be going up in price but cutting costs is easier than most people care to admit. Supermarket trolleys invariably have items in them in the luxuries-turned-necessities category. Mine does.
One small change here and another there, layered one upon each other, soon adds up to a lot of savings. Making some of the most expensive ready-made foods you buy is one. As a house, we drink more soy milk a week than the local checkout operators are supposed to let us buy in Covid times.
It should be easy to make our own and I’m experimenting. If it works, it will be a real inflation buster. It will be added to the many other simple-to-make household staples in our house such as pesto made from mint and frozen in cubes.
Limiting your wants can actually be quite satisfying. I’m not perfect, but the fewer things I buy the happier I tend to be. Warren Buffet’s offsider Charlie Munger once said: “One of the great defences to being worried about inflation is not having a lot of silly needs in your life.”
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