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Higher prices, lower income: Winning the race against inflation
How can you guarantee your financial security and future? Here are five tips on how you can manage inflation
From Brazil to Brunei and pretty much every country in between, inflation is on the rise.

In Brunei, families are feeling the pinch. Take a family of five; both parents are working while raising a teenager and two young children. 10 years ago, $50 could get them a basket full of groceries. Today, because of inflation, they can only purchase a few vegetables, fruits, snacks and maybe some protein for the week.

Whether its housing, healthcare or childcare and school fees, families are very aware of rising costs. Some are making lifestyle adjustments and cutting back on eating out, while others are doing comparisons on which supermarket offers the best prices for groceries.

According to the Centre for Strategic and Policy Studies, inflation is expected to moderate to 2.5% this year but this remains at a historic high. What’s behind this rise? Rising commodity prices, supply chain disruptions from the pandemic and the Russia-Ukraine war have put pressure on food and energy prices which have been passed on to consumers.

The situation is aggravated in Brunei because 70% of our goods are imported from overseas. And this is the harsh reality – families are spending more than before but earning less.

How can you guarantee your financial security and future? Here are five tips on how you can manage inflation:
1. Track your expenses
This is probably what you read or hear most when it comes to managing your finances and you might be tempted to ignore it, but the reality is that tracking your expenses is an important first step. Start by establishing a habit of tracking your expenses monthly and adjust by categorising your expenses into needs versus wants. Warren Buffet’s long-time business partner, Charlie Munger, has this advice on dealing with periods of high inflation. He said that if you’re worried about inflation, don’t have a lot of silly needs in your life.

Determine if you can cut back on your “silly needs”. Do you need to subscribe to 3 or 4 streaming services? Could you cut back to one? Or is it necessary to have your morning coffee at your favourite café every day? By reducing the frequency of your expense or looking at more budget-friendly alternatives, you would be surprised at how much you can save.

2. Grow your income
There are many ways to increase your income to take some pressure off the high cost of living. For starters, ask for a raise. Many workplaces understand the challenges that workers face in the current inflationary environment. Or is it time to consider a new career? Some industries pay more than others and while this is always changing, technology is always a field that is in demand. However, don’t switch careers for the sake of money.

You can also make extra money by starting a side hustle. Do you have a hobby like baking, knitting or making crafts? Start by baking cupcakes or cakes for the special occasions of friends and families. Alternatively, consider selling some of your knitted items or artwork for some extra cash. Increasing your social media presence is another option, whether it’s on Instagram or TikTok. It will take some time to establish your presence online and finding your niche, but once you have attracted a sizeable following, you can start expanding it into a blog and monetising it with ads or paid posts.

3. Stretch your dollar
By shopping smarter, you can make your dollar work harder. There are simple ways to start. For example, opting for household brands at supermarkets, buying in bulk to secure more significant discounts or purchasing pre-loved items on at second-hand shops or platforms.

Using debit or credit cards is another way to earn rewards. For example, the RB Visa Cards can help you earn miles for travel. By spending on the card, you can use your rewards to reduce flight expenses or even get a free flight to your next holiday destination. There are also opportunities to convert your credit card purchases into easy instalments of 6, 12, 18 and 24 months at 0% interest.
4. Invest in your tomorrow
It is also never too late to start thinking about your future. Retirement planning is a lifelong process and the earlier you start thinking about the future, the easier it will be to achieve your goals. Financial management starts with setting up a budget and a savings goal, and making sure you commit to a fixed amount each month to your savings and retirement accounts.

Consider a shorter tenor savings plan that is flexible. Having an additional fixed monthly retirement income will help you maintain your needs and wants through your retirement years, allowing you to have the flexibility to spend on travel and discretionary purchases.

Remember that inflation will eat into the value of your cash over time. $100 in your savings account will be a lot less in 10 or 20 years if prices continue to rise. While it is prudent to maintain a regular savings plan, investing is a great way to grow your returns and beat inflation.

Once you’ve started investing, review your portfolio regularly and consider your risk tolerance, time horizon and goals. These may change over time, depending on your life circumstances, like a new career, a new child or long-term sickness.

Before getting started in your investment journey, read our article 5 things to know before you start investing.

5. Insure your future
As you examine your expenses, you may be convinced that cancelling or lowering your insurance coverage will help reduce your monthly expenses. However, worrying about a critical illness or accident and paying for your medical expenses is the last thing you need at a time when your income is stretched.

Insurance is an important part of financial planning. An insurance plan helps pay for medical emergencies, hospitalisation, contraction of any illness and treatment, and medical care required in the future.

By ensuring that you’re adequately insured, you can protect your loved ones and your savings. In addition, you can future proof your finances from unexpected events. If you have a child, an insurance plan also ensures your child is financially secure while pursuing his or her higher education.

Here is the main takeaway.

Inflation isn’t going away anytime soon and before it begins to chip away at your hard-earned income, start planning and investing to secure your financial future. If you’re ready to get started on your investment journey, complete a lifestyle questionnaire and book a consultation with our team. You can also check out Baiduri Capital’s website or get in touch with us at +673 225 8588 or [email protected].

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Important update
19 September 2023

We would like to inform you that with effect from 31 October 2023, Business i-Banking service will no longer be operational, and this will be replaced with our new Baiduri b.Digital Business service.

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