Inflation rates across the globe are due to see basic necessities reach price heights not seen in over 40 years this summer, according to experts.
Over the last few months, Irish households have been trying to cope with cost hikes across all areas of expenditure, from a jump in the price of household bills to filling the car and even doing the weekly grocery shop.
The current Russian invasion of Ukraine has resulted in surging prices of oil, and this looks likely to rise further over the coming weeks and months, which is bad news for many drivers.
Financial Adviser and Wealth Manager at Moneysmart.ie Fonz Scanlan spoke to the Irish Mirror about how people can minimise the effects on their pockets by taking action now.
Speaking about some of the main areas where families will see a further hike in costs over the coming months, Fonz said: “We are seeing the quickest and sharpest price rises in our energy bills and fuel costs, which have been directly impacted by the war in Ukraine.
“At the same time, the post-Covid combination of disrupted supply chains and pent-up consumer demand is driving prices up across many other areas, food being the most noticeable.”
Whether you’re already a money maestro or have never been interested in long-term saving goals, it is more important than ever to ensure that you can afford the rising costs coming our way.
When it comes to short-term solutions, Fonz said: “When costs rise, especially if it's a temporary spike, I advise clients not to reduce any pension or investment contributions but instead try to cut household expenses.
“Changing where we shop and what we buy is one obvious idea to consider.
“However, there will be many who can only cut costs so far, and for them, there may be no other option but to reduce or pause regular savings contributions.”
If things continue on the path they’re headed at the moment, families nationwide will need to have plans in place for the future, to ensure they can meet the incoming cost of living.
“Hoarding cash in bank accounts or state savings or prize bonds over the long term is not a good idea, especially in inflationary times,” Fonz warned.
“I recommend investments in global equities to all my clients as the best way to beat inflation in the medium to long term.”
Every single person has a number of frivolous costs that could be dropped when in a situation where finances are tight, however.
Mr. Scanlan says: ”Whether in good times or bad, I'm a firm believer in cutting out 'thoughtless spending' - in other words, make sure you think through every significant household cost or purchase.
“With inflation driving up many of our 'fixed costs', the necessities that we cannot do without, we have to be more ruthless than ever when it comes to spending on non-essentials.”
If you feel like you’re alone in the struggle to meet costs, Fonz reassures you that: “I am definitely seeing the impact of higher expenses in my clients' financial plans.
“It's a topic that needs to be addressed so that longer-term saving goals are not derailed.”
Despite the currently available support brought in by the Irish government, it seems likely to fail in its bid to help families meet the growing costs.
“The Government has announced a package of measures aimed at softening the blow of sharply rising prices, including fuel allowance increases and a €200 credit which will appear in our electricity bills in the next month or two,” Fonz explained.
“However, the ESRI (Economic and Social Research Institute) warns that this will fail to overcome the inflation spike and they expect disposable household income to fall in 2022 in real terms for the first time in 10 years.”
READ MORE: Woman claims clever heating hack cut her energy bill from €107 to just €14 a month
READ MORE: Couple share 'ruthless' money-saving tips after living on €1 a day to clear €51,000 debt
Get breaking news to your inbox by signing up to our newsletter.
