Cost of Living Crisis: How "Spending Intelligently" Can Help You Thrive in a High Inflation Economy

The current cost of living crisis, fueled by high inflation, has many people struggling to make ends meet. But don't worry—there's a way to maintain your lifestyle without breaking the bank.

In my previous article about how I 7X'd my income in 5 years, I also talked about the simplicity of financial freedom, where the second step in the process is to "spend less money". So, I'm about to share my secrets on how I used the same tips and tricks to reach financial freedom, to adapt to our current challenging economic environment, and keep my expenses in check. It's with a strategy I call "Spending Intelligently."

Spend Smart, Save Big

"Spending Intelligently" is about making small, informed changes to your spending habits that lead to significant savings, even in times of high inflation. It doesn't require extreme frugality; rather, it's about getting the most value out of every dollar you spend. Here's how you can adapt these strategies to tackle the cost of living crisis:

1. Opt for lower-cost supermarkets and off-brand products: With rising prices, finding the same quality products at a fraction of the cost becomes even more critical. Off-brand items often offer similar quality to big-name brands without the hefty price tag.
2. Seek credit cards with better incentives: Look for credit cards with cashback, reward points, lower interest rates, and fewer fees to help stretch your budget further.
3. Refinance mortgages and negotiate better interest rates: High inflation often leads to higher interest rates. Take advantage of competition between banks by refinancing your mortgage or calling your current bank to negotiate a better rate.
4. Shop around for better deals on utilities and wi-fi: Regularly evaluate your utility providers and let them know you're considering switching. They may offer you a better deal to keep your business.
5. Share living expenses to combat rising rents: Living with friends, roommates, or family members can help offset skyrocketing housing costs.
6. Share subscriptions like Netflix and Spotify: With the cost of entertainment rising, splitting the cost of subscription services with friends or family can help you save money.
7. Shop for clothes, shoes, and accessories during the off-season: Buying seasonal items during the off-season can lead to considerable savings, especially when prices are on the rise.
8. Wait for massive yearly sales to buy electronics: High inflation means higher prices on electronics. Patience pays off when waiting for sales events like EOFY or Black Friday to snag deals.
9. Utilise deal websites to offset the cost of living crisis: Websites like Groupon, Slickdeals, LivingSocial, and Scoopon offer discounts on travel, dining, and experiences, helping you stretch your budget further.
10. Use e-commerce extensions for added savings: Earn points or cashback for your online shopping with extensions like Honey, Rakuten, and Cashrewards.

On top of utilising all of these tips and tricks to live the same lifestyle for a lower budget, one thing to do is to take a look at all the outgoing cash each month and ask yourself, ‘Do I really need that?’.

So instead of grabbing takeout every day, you could instead meal-prep and cut your food costs in half each week, or instead of ordering coffee at Starbucks each morning, you could make your own to cut down on coffee costs by 90%. Whatever it is, there’s a better, more cost effective way to get the same or very similar outcome.

Once you start to shift your mindset to ‘Can I still be just as happy without all of this extra stuff?" then you’ll start to focus on how you can create a much healthier bank account with more money left at the end of the month to go towards your financial freedom and help you better navigate these murky waters of high inflation.

The Takeaway

Spending intelligently can help you navigate the cost of living crisis without sacrificing your quality of life. By implementing these strategies (and I'm sure there are more that you'll be able to come up with in relation to your personal circumstances as well), you can adapt to high inflation, make your money go further, and thrive even in challenging economic times. Good luck on your journey to smarter spending, and I hope these tips help you as much as they've helped me!