The country's economic managers project the inflation rate in the Philippines to be 2.9 percent to 3.1 percent in 2025. Inflation impacts spending power and in turn, your finances. It is a factor why your hard-earned money will lose its supposed value. In fact, a recent study on retirement planning identifies inflation as a key challenge in planning for the future. Are you ready to face inflation and its effects without sacrificing your life goals?.  

 

What is Inflation?

Inflation is the rate of increase in the prices of goods or cost of living over a given period. According to Investopedia, inflation is a gradual loss of purchasing power that is reflected in a broad rise in prices for goods and services over time. Simply put: If you can buy a meal for PHP 100 today, the same meal would cost more in the coming years.

Reality bites hard because inflation is inevitable. Your money must ride the wave of inflation or outperform it. Here are ways to beat inflation.

 

1. Don’t just save. Invest!

Saving money is good but not enough to outpace inflation. Putting your money in high-interest savings accounts and long-term time deposits will not match inflation rates. What’s the ideal step? Save money to cover two years' worth of your expenses and then put everything on top of that to investments. This way, your money will grow and match the pace of inflation.

 

2. Know your investment options.

Investments are designed to grow your money, preferably beyond the inflation rate. Dedicate time to learn how they work. Check out financial institutions and mutual fund companies like Sun Life to know the best options for your goals. 

Check out easy and accessible financial investments for different types of investors.

 

3. Beware of lifestyle creep. 

Lifestyle inflation is dangerous as it could result in excessive spending. This usually happens when income grows, and money is splurged on living expenses and non-essentials. When this happens, strive to save more and spend in moderation to eventually achieve financial stability.

 

4. Pay off debts.

Inflation leads to an increase in the cost of living. Prices of basic commodities from food to clothing become more expensive. With reduced purchasing power, it is harder to make ends meet. Debts may pile up and you’ll struggle more to pay them. However, you must not ignore them. Pay off your debts and start with the high-interest ones. 

 

5. Diversify your income sources.

You can beat the rising cost of commodities by finding other income sources. Explore side gigs like being a financial advisor that can help you earn more. Part-time jobs and small businesses are good sources of income that will enable you to save more.

 

6. Build your emergency fund.

You’ll need extra cash when inflation surges. Prepare your emergency fund so you’ll have an extra income source that will keep you afloat and cover the sudden increase in the prices of goods. Ideally, you should have at least six months' worth of expenses for your emergency fund to suffice. However, if you have a family to support, it would be better to target 9 months to a year.

 

7. Seek the help of a financial advisor.

Work with a financial advisor to be guided on how you can fight inflation. Through them, you’ll get the right advice on how to grow your money so your wealth will increase along with the surge in the prices of goods.

Talk to one of Sun Life’s financial advisors today. 

 

Inflation affects your financial goals but you can fight it and survive through difficult times. Take note of the money strategies that can make you inflation-proof

Watch this video to learn how inflation affects your finances, and how you can overcome it.

 

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