Sri Lanka is undergoing its worst economic crisis since independence, with HYPER INFLATION driving up the cost of basic necessities, and every Sri Lankan has been experiencing sticker shock and going insane owing to the extreme shortage of food, fuel, and other essentials.
We just keep whisper-shouting “GoHomeGota!” Every time we go grocery shopping or reach for our wallet to pay for the sky-high bus fares that we used to pay without thinking but can no longer rationalize. Our weekend plans went from weekend getaways to long queues at the fuel station, and now our main goal is to buy LP Gas or Kerosene for cooking in our households, and the misery does not appear to be ending any time soon.
The current level of inflation in Sri Lanka is having a huge detrimental influence on our quality of life, particularly for those with lower incomes. However, certain aspects, like our lifestyle and money management, can lessen our pain and hopefully help us.
Therefore, we’ve put together some survival strategies to help you beat the curse of inflation, so stick with us until the end of this short article and you’ll learn everything there is to know about surviving anything inflation throws at you.
Await a deeper crisis & be prepared for inflation to stick around.
Now, this is unlikely to cheer you up during this hard time, but according to the Bloomberg article “Double-Digit Sri Lanka Inflation Seen Lasting Through Early 2023” by Asia Economic Data Editor Cynthia Li, Sri Lanka’s inflation is expected to continue at least through the first quarter of next year, based on a survey of economists conducted during the country’s economic crisis.
Furthermore, the Bloomberg survey of experts predicted that consumer prices would climb by nearly 20% in the second and third quarters of this year.
In conclusion, there is a high likelihood of inflation continuing to rise from here, therefore it is vital to be prepared for the worst.
- Pay off your debt.
During times like this, many people place debt repayment at the bottom of their financial priority list. However, paying off debt, particularly variable-rate loans with interest rates that fluctuates with market interest rates, such as a loan, bond, mortgage, or credit card, should be one of your top priorities right now.
Because if your wage rises in line with inflation, you can profit from it by repaying the debt you incurred prior to the increase. This is because you still owe the same amount of money, but your salary is adequate to repay the loan in full without incurring interest. So, by utilizing this extra money to pay off your debt sooner, you will pay less interest.
Inflation, by definition, causes a currency’s value to diminish over time. To put it another way, today’s money is more valuable than tomorrow’s money. As a result, debtors will repay money that is worth less than when it was borrowed. So, it is the perfect time for you to consider paying off your existing variable debt.
- Take on new debt with caution & avoid variable rates.
Variable-rate debts can become more expensive when inflation rises.
Sri Lanka’s central bank, for example, raised its major interest rates by an extraordinary 700 basis points each to combat inflation. This is due to the fact that when prices rise as a result of inflation, demand for credit rises, rising interest rates, resulting in debtors paying high interest to creditors.
To avoid this, you can refinance your variable-rate mortgage into a fixed-rate loan or combine high-interest credit card debt into a personal loan with predictable payments to protect yourself from this abrupt spike.
Also, be mindful of taking on a lot of new debt in general: additional debt adds a new monthly payment to your budget and restricts your financial freedom, even if rates are low or fixed.
- Boost your income.
Increasing your monthly income is another strategy to keep up with the rising cost of goods and services. Consider requesting a raise from your existing employer. Outline your accomplishments over the past year to your manager. The worst thing they can say is no, but it never hurts to try and ask for a raise, does it?
Or as a side hustle, you can work contract basis remote jobs and get paid in foreign currency, which will benefit you and protect you from inflation. Another strategy to boost your bank account is to sell your unused items.
However, don’t try to turn your hobby into a small business because it could backfire, as half of small businesses are already crippled by the country’s situation.
- Don’t squander your petrol.
Fuel costs more than twice as much as it used to and finding fuel in Sri Lanka is not for the faint hearted!
Therefore, to preserve the fuel in that tank, try to plan your trips as efficiently as possible. Turn off your vehicle instead of leaving it running as you wait in line for fuel or in traffic. Rather than going to the store every day, make a list of everything you will need for the week and go all at once. If you have a lot of errands to run, schedule them as effectively as possible to save money on fuel.
- Make an emergency fund investment.
When prices rise, it’s tempting to hunt for assets that will keep up with inflation. Before deciding where to invest, experts recommend setting aside enough cash to solve any existing financial concerns.
According to financial experts, having a year’s worth of finances on hand is essential. With inflation on the rise, it’s more crucial than ever to be prepared for the unexpected, such as a major health issue or a job loss. Therefore, consider putting aside a savings fund that could come in handy during these unpredictable times!
We hope these points will be able to give you some insight during these troubled times and help you alleviate your struggles at least a little bit! Let us stay strong and continue to thrive and survive while doing our best to help Sri Lanka get back on her feet again!
