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Feeling Challenged to Save Money During Tough Times? Here's How to Beat Inflation in the Philippines 2022!

11 July 2022
Feeling challenged to save money in these tough times Heres how to beat inflation in the Philippines 2022

Since the start of this year, inflation in the Philippines has been climbing consistently, and there is no way to escape it. But believe it or not, inflation is inevitable in every economy and we can't do anything about it.

 

In reality, among the most recent information available, it seems that June 2022 had the Philippines' inflation rate at 6.1%. As can be seen, this was much higher than May's inflation rate, which was 5.4%. This is, according to the Philippine Statistic Authority (PSA), the highest rate of inflation since November 2018.

 

That's why we are going to tackle several ways your family may combat inflation in the Philippines. But before anything else, let's first have a better grasp on this economic issue before moving on.

 

What is Inflation?

Inflation means that tthe cost of products and services increases over time. It weakens the value of your money, which indicates that the same peso you have now will only be able to buy you less in the future.

 

As an example before the pandemic, the typical fare for a jeepney was about Php 10. However, the same amount won't get you a trip this time since the minimum fare is already Php 11.

 

As a percentage, inflation is computed by comparing the prices of a basket containing a variety of products and services. The Consumer Price Index (CPI) is the most often used inflation indicator in the Philippines. Prices of a defined basket of products and services that are usually purchased by people are monitored by the consumer price index, or CPI. Among the goods in this basket are things like food, lodging, transportation, and utility services.

 

According to Philippine Statistics Authority (PSA), they publish the Consumer Price Index (CPI) every month.

 

Why there is a rising inflation rate in PH

Several variables, both local and global, have an impact on the rate of inflation in a country. There are, however, a few major events that have contributed to the country's current high inflation rates.

 

It's reasonable to argue that the COVID-19 pandemic is to blame for the current high inflation rate. The pandemic greatly impacted the supply chain, resulting in an increase in the cost of goods and services.

 

In point of fact, the Bangko Sentral ng Pilipinas (BSP) points out that the country's inflation rate might rise due to a variety of circumstances. These include the ongoing confrontation between Russia and Ukraine, which has the potential to boost global oil and food costs. In addition, the country's central bank notes the rise in global non-oil product prices, such as agricultural commodities and metals, a continued shortfall of local pig supply, higher fish costs, and increases in jeepney fares, all caused by the rise in oil prices.

 

Effects of inflation rates on Filipinos

In order to find a solution to inflation in the Philippines, we must first need to understand the impacts of inflation on ourselves and our families. Through this, we'll be able to get a better understanding of the situation at a micro level in this manner and be better prepared for it.

 

Below are the possible effects of inflation on Filipino families:

 

Significant Lifestyle Modifications

In the past, even with a Php 1, 000 grocery budget, you'd be able to fill up your basket. However, this isn't possible anymore.

 

A few tweaks here and there will be necessary to get the most out of your money. Generic brands or sacrificing products that your family can live without, such as pasalubongs and impulse purchases at the counter like chocolate bars, are some of the unexpected expenses that you might cut short.

 

It's also possible that inflation will influence your leisure spending habits, too. As time goes on, you'll find yourself cutting down on trips to milk tea and coffee shops, as well as purchases from online stores.

 

Decreased Purchasing Power of Regular and Fixed Income Citizens

Fix-income households provide security for many Filipinos. Retirees who rely on pension benefits are among them. The fact that pension recipients get the same amount of money over time makes it easy for them to determine how inflation affects them. Eventually, they may realize that their monthly pension is not enough to maintain the lifestyle they have created since retiring.

 

Nonetheless, those who depend on a single source of income and do not get a raise may find themselves in the same situation.

 

Being forced to seek for other sources of revenue

In what ways does inflation impact the average Filipino family?

 

There's a good chance that having two or more kids in school will make it harder to keep your home budget balanced while still paying for their education. Due to this, you'll be forced to choose between finding an additional job as a freelancer or starting your own small business in order to increase your monthly income.

 

Even if it works, it may come at a high price in terms of your sanity or well-being. That's why it would be better if you start honing your organizing abilities before you take on more work, so that you can keep your personal and professional lives separate.

 

Having to Pay More in Interest 

Generally speaking, interest rates rise when inflation is rising as well. A decreased buying power means that lenders, who make a significant portion of their revenue by collecting interest, would demand higher rates to compensate. That said, unless it's absolutely necessary, you should consider carefully before taking out a loan of any kind.

 

Becoming incapable of saving or investing money

One of the most evident impacts of inflation in the Philippines is the rise in prices.

 

In times of rising costs, you may find yourself forced to allocate a part of your planned savings to necessities like your basic needs like food, housing, and monthly expenses on utilities. Your capacity to save for an emergency or retire comfortably may also be hindered due to a lack of financial resources available to you.

 

In the same way, your financial goals to increase your investments or to start-up a small business might be put on hold.

 

Now that we better understand the effect of inflation in the Philippines, we can come up with some measures to beat it.

 

How can we beat the negative effects of inflation in the Philippines

A rise in the cost of products and services might eat away at your income if you don't plan ahead. It's a blessing that the Philippines' inflation problem may be addressed in a number of ways. These are some of the methods that you can adopt in your household:

 

Find New Ways to Earn Money

Is there anything you can do that is in demand and you have some time to spare? In the gig economy, freelancing is an option. Working as a writer, web designer, or virtual assistant is highly sought after in many foreign countries.

 

Since you don't need a large amount of capital in these kind of jobs, it's an excellent strategy to gain additional income. You may earn a cosniderable amount of money as long as you have a solid internet connection. But be careful to not take more than what you can carry, though. If you don't take care of yourself, the quality of your work at your day job may decrease or you may suffer from burnout.

 

On the other hand, if you're not a fan of side jobs based on your abilities, you may still make money by establishing your own company. If you want to save costs, move your business to an online shop. You may open a business on Facebook or Instagram, or you can become a reseller of any product that's in demand.

 

Set and Stick to a Budget

Everyone in your household must adhere to a budget that clearly outlines the priorities and spending restrictions for each area of necessary expenses and basic necessities such as food, groceries, entertainment, gasoline, etc.

 

As a result of recent significant local and worldwide events, food and utility prices have risen particularly sharply. In terms of your family's finances, you may either increase or decrease the amount of money you allocate to these products to manage your spending better. Whether you can afford or not these essentials is a determining factor in which option you should choose.

 

As a family, work together to find ways to reduce your water and power use so that you may keep your monthly bills as low as possible.

 

When it comes to saving, investing, and paying off debt, a family's budget should be as strict as possible, but it may be more flexible when it comes to other types of expenses. Adjusting the amount you spend in various areas is especially important during times of inflation.

 

Avoid Unnecessary Costs

Check your budget and see if there are any costs that may be eliminated or reduced.

 

When costs continue to rise, there are several ways a family may save money. A movie marathon or a game night might work well as a staycation if you don't have enough budget to take your family on a vacation or even just to the movies at the mall every weekend. It's a far more affordable way for families to spend time together that doesn't cost too much money.

 

Stay Away From Inflationary Trends

Did your new job gave you a better salary? It doesn't make you inflation proof! A larger paycheck may urge you to spend more on a better lifestyle and home necessities but as there are recent price increases, it could damage your budget, even if you can currently afford it.

 

Making the most of your achievements isn't always a bad thing, but as with all good things, moderation is vital. Maintaining a thrifty lifestyle and living within your means is the best way to keep inflation at bay.

 

Take advantage of Sales, Discounts, and Promotions

This inflation-fighting strategy in the Philippines may seem obvious, but it offers a number of advantages. Take advantage of the 5.5, 7.7, or 11.11 bargains of online merchants like Lazada and Shopee. Since many sellers on these sites offer Buy One Get One bargains on necessities such as toiletries, saving money on these items is a no-brainer. Consider signing up for the stores' e-newsletter while you're at it.

 

Use your credit card to pay for your purchases or meals out with loved ones. It's possible to get a discount or even freebies if you spend a certain amount.

 

Compare your expenses with today's costs

In order for you to know whether you're on track with your family budget, it isn't enough to just create one.

 

You have to figure out where your money is coming from and going to. Gather and double-check all of your invoices, bank statements, receipts, and any proofs of revenue you've received. Even if it turns out that you've been overspending on gas, you may immediately begin planning ways to reduce your fuel costs.

 

Prepare for Unexpected Events by Including a Flexible Budgeting Option

It's far simpler to spend all of your income on necessities than it is to save for unexpected costs due to recent price increases.

 

No matter what occurs, keep saving for a rainy day so that the rising cost of things doesn't give much of an impact on your budget. For your family's emergency fund, aim to save a certain percentage or around 10% of your overall expenditure. When things are tough financially, you'll be glad you have it.

 

Continue to make investments

The increasing inflation rate is not a cause to abandon your assets. Actually, if you want to fight inflation over the long haul, you'll need to put more money away. Make investing a permanent component of your home budget.

 

Even though inflation is happening, your money will continue to increase if you invest in stock market, mutual funds, ETFs, and other such instruments that create income for you over time. In fact, one of the best forms of investment that you can apply in your financial decisions is real estate investment.

 

Real estate investments are a good way to protect against inflation since the value of house and lots tend to rise over time.

 

Just make sure to choose a property that gives value to your money supply such as house and lots located in the key cities and municipalities in the country.

 

Lumina Homes is one of the communities that are built on strategic locations all over the Philippines that make its house and lot packages pretty accessible to major roads and thoroughfares as well as various facilities. Investing in properties like Lumina Homes is like an all-inclusive savings account that gives you value for your money.

 

Apart from this, you can also turn your home investment into an income-generating business by renting out your property giving you additional revenue through rental income!

 

Start your smart home investment with Lumina Homes now to witness your property value appreciate over time and beat the inflation rate in the Philippines!

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