Cutting down your expenditure

What you need to know:

Fuel prices fell at the start of the pandemic, but demand has roared back since, and the global inflation rate, at which prices rise, is at its highest since 2008.

Rising inflation is a concern for Rose and Peter Kavuma, a couple in their 40s living in Gayaza, Wakiso District. They have noticed a spike in prices for essential commodities such as food and gas over the past few months, a situation that is forcing them to re-evaluate their budget and become extra cautious about their spending.

From buying groceries to clearing utility bills, the cost of living is rising sharply not only in Uganda but also worldwide.

Fuel prices have increased by 15.3 percent in the last three months and by 34 percent in the past year, these prices fell at the start of the pandemic, but demand has roared back since, and the global inflation rate, at which prices rise, is at its highest since 2008.

The rising cost of agricultural produce that is grown in the country, is forcing them to change their weekly grocery planning.

Reduce unnecessary expenditure

“We had no choice but to reduce our grocery budget,” says Kavuma, a social worker.

 “People should cut unnecessary costs. That if you can live without something even if it is a necessity, cut it out of your budget. There are also other items whose prices are going down, so you can switch to buying those,” says Mr Fred Muhumuza, a senior economist.

He says one can get goods and services on credit and pay later.

However, getting things on credit does not cut out your obligation. Yyou should not reach in future, when your obligation of clearing is still there.

Ms Bernice Muhiirwa, the wealth manager at Stanbic Bank, says fuel prices are at an all-time high, and higher prices for consumer goods mean less discretionary spending for families with lower incomes. But it also means many families are having to shift their budgets just to cover their basic necessities.

“Households need to have a budget in the first place. They have to remember that when the prices increase for many people their earnings remain the same. That means they buy less things with the same amount of money,”Ms Muhiirwa says.

She explains that many people do not have a budget.You have to understand your necessities and where the prices have risen, because if “Your earnings remain the same, and prices have increased it means you need to cut down on some things.”

Expand income streams

Another thing is to understand your income streams and come up with a budget. If your income has not changed and prices increase, it means your income is now being strained.

Ms Muhiirwa advises people to find other ways of earning an income.

“Deliberately think, what else you can do to earn more money because your income has not changed. It may not be another job, because people are really struggling to get jobs. Sit back and think about which other skills you have that you can use to leverage other sources of income,”Ms Muhiirwa says.

“Understand your little economy of your home, the expenses and how to manage them. You have to write down, it means you are acknowledging your situation. Note those areas where you can spend less and decide where you can cut down on what you spend. Think of cheaper items you can buy to supplement the expensive ones,” she advises.

She added that the rising cost of living is not about to end. So you must think and exercise your mind, little savings, have delivered people during tough times.

Leah Namiiro, a team leader at Colour Your Footprints, advises people to buy what they can in bulk because it is cheaper.

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