How to cut costs amidst high cost of living

Today, almost all conversations revolve around the rising prices. Increase of general price levels is generally known as ‘inflation’. The common man feels the inflation when the prices of his consumer goods go up. He feels the rising cost of living with each increase of bus fare, bread prices and utility bill prices. Any one may be tempted to think that in the event of a high cost of living, the business community benefits. This is wrong; the profits earned by the business people are all spent when they also go to secure the goods and services in the market place.

Cost of living literally means the amount of money needed to sustain a certain level of living, including basic expenses such as housing, food, taxes, education and healthcare. Cost of living is often used when comparing how expensive it is to live in one city versus another. It is a significant factor in personal wealth accumulation because a smaller salary can go further in a city where it doesn’t cost a lot to get by, while a large salary can seem insufficient in an expensive city.

Studies have shown that money is the number one source of disagreement in the early years of a married or long-term relationship. When inability to provide for the family sets in, the strain starts to show at home as arguments over bills and spending become more frequent and the strain takes its toll. A vicious cycle has the potential to begin as the negativity of financial strain replaces the positivity of love and togetherness.

Over the years, our wants and needs have increased. In the early days, the father of a family would be the sole breadwinner and with his earnings, his family would build a house, educate the children and save for the future. As the economy developed our wants and needs have got complicated. In food, clothes and almost all consumer goods, there is a wide variety and greater choice. With variety and choice, comes the price to pay.

 The cost of living has always been higher in cities than in the rural areas. First of all cities have greater population than other areas. This means that demand for goods and services is likely to get higher. If the supply of these goods and services remains fixed prices will go up because the demand is steadily outweighing supply.  Secondly, on average city dwellers are educated, trendy and luxurious. Their affinity for fashionable and trendy goods and services is unquenchable. It is likely that the business community will exploit them through charging highly.

There are some things in everyone’s life which just aren’t necessary. Before you spend it is important that you have full knowledge that you actually need that item.  This is the time for you to distinguish between the needs and the wants. You may want to spend on a manicure and pedicure but all you need is to pay fees for your children.  Even the items we need can be bought at less than their prices without sacrificing your standard of living. Certain expenditures like school supplies for your children are essential, but you may have to start buying plain pencils instead of cartoon character stationary for example.

In this tight economic environment we need to stop losing money. You may think that you don’t lose money but the average Ugandan is unable to account for about twenty thousand shillings a week. This expenditure on ‘unknown items’ adds up to over one million shillings a year! Most people blame it on unexpected supermarket spending and nights out, but it’s very important to keep track of every cent in this climate. A somewhat painful but necessary process is the tracking of your family outgoings. Sitting down with your partner and honestly reviewing where your money is going will almost certainly make you realize a disproportionate area of spending which can be easily rectified.

 The first lesson in managing personal finances is “Cut the Bills”. Bills have persistently increased day by day hence the need to cut them. These huge increases in bills undoubtedly exceed the recent increases in your income.  Now is certainly the time to shop around for the best deals on gas, electricity and water. One of the best ways to cut your bills, however, is to utilise the ‘free’ elements included in things like your phone bill. Using the inclusive minutes on your phone in an active manner will allow you to reduce your monthly phone bills.

In the bid to keep the head above the water families have gone ahead to reduce the number of meals they have in a day. Others go to bed earlier to save electrical energy that would otherwise be wasted in lighting bulbs. Some families have acquired small cups and plates to minimize the amount of food or tea one takes. The tough economic times have also trained people to observe family planning since a large family is hard to manage. Communal functions and parties have been replaced with smaller functions for a few invited people. The list is endless. This is the time to change your ways.

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