The cost of living is going up, and it’s something citizens all over the world are grappling with.

Previously, I shared some smart ways to manage your budget amid rising food prices.

However, food isn’t the only thing that’s gotten more costly. Everyday goods and services are becoming more expensive too – from property rentals to fuel, weekly groceries, public transport and school fees.

Case in point: I just paid S$200 to service my one-year-old air-conditioner’s four fan coil units, and it stung. According to the Goods & Services Inflation Calculator, this is about S$26 more than what I would’ve paid in 2012! Add this to other price hikes in our day-to-day life, and it’s easy to feel like it’s becoming too expensive to just live.

In this article, I'll share seven inflation hacks, including a bonus tip:

• Grow your income as much as possible
• Invest your earnings for passive income
• Cut your expenses
• Use water efficiently and milk discounts on utility bills
• Refinance high-interest loans
• Know the best times to book your holiday flights
• Barter trade
• Bonus: Use insurance to cushion the impact of rising prices

The effects of higher costs of living

Inflation causes the value of money to decrease which means you can buy fewer things and services with it or you have to spend more on them, i.e. your purchasing power shrinks. A higher cost of living usually means less money left over for your savings goals and discretionary, or non-essential, spending.

Adding to cost-of-living concerns is the goods and services tax (GST) rate which inched up to 9% on 1 January 2024.

How can you stop Singapore’s rising cost of living from weighing you down?

How can you prevent inflation from pulling you away from your financial goals?

Try my inflation hacks to cope with rising costs in Singapore, save more (yes, I kid not!) and stay on track to achieving your financial goals. (Incidentally, if you feel life is wearing you out, you might like some tips for coping with stress.)

Inflation hack #1: Grow your income as much as possible

Rising costs? Make your income rise faster! You can do this by increasing your current salary, taking on extra jobs or both.

Flexi work arrangements and the gig economy are compatible partners when it comes to boosting your income. I’m not saying you shouldn’t take your regular job seriously – in fact, it should continue to be your focus and you should still strive for that promotion or pay increase, which is one way to tackle rising cost pressures.

Don’t fret if you can’t smell a promotion or pay raise. As long as it doesn’t conflict with your day job, part-time side gigs like event hosting, food deliveries and web design in your spare time offer unlimited potential to earn extra cash. This is turn can help you offset increasing childcare fees, petrol and other costs – and maybe even keep to or exceed your monthly savings targets.

Inflation hack #2: Invest your earnings for passive income

Earning more is key to beating rising cost pressures – so is what you do with your income. After you’ve set aside your monthly budget for essentials, insurance protection and non-discretionary expenses, the general rule of thumb is to save the rest. Instead of leaving your money in a next-to-zero-interest savings account, consider investing for potentially higher returns.

Investing more of your savings could mean working fewer years to reach your retirement goal i.e. retiring earlier than planned!

Investing comes with risks as this Grow Me the Money article explains, though, so pick a product that matches your risk appetite and financial profile. For instance, Singapore Savings Bonds (SSB), insurance endowment plans, blue chips, gold, ETFs and so on, all come with different risk levels and investment periods so exercise due diligence when choosing an investment product or get expert help from a trusted financial adviser.

TIP: You don’t have to wait till you’ve accumulated a few thousand dollars to invest. With SSB, for instance, you just need a minimum of S$500 to start. Invest small amounts regularly to spread out your risks and generate a passive income stream.  

Inflation hack #3: Cut your expenses

Aside from generating more income, decreasing your expenses can help you tackle the rising cost of living and advance towards your financial goals.

Cut out all the money suckers in your life – you know what they are! If you live in an area well served by public transport, give up your car and rent one only when you really need it. Moving to a less expensive neighbourhood or sharing your apartment with a roommate could also help reduce your costs.

Don’t forget to maximise your company’s employee benefits such as annual health check-up allowances as well as medical, hospitalisation and personal accident coverage, so you needn’t touch your own savings for things like consulting a medical specialist.

Inflation hack #4: Use water efficiently and milk discounts on utility bills

By April 2025, most households will pay S$4 to S$9 more, before GST, for their monthly water bill due to rising water costs. The good news is that middle- and lower-income households will get help from the government to cope with this.

Using water more efficiently can bring down your bill further. Here’s how:

• Choose a water-efficient model when replacing your washing machine, toilet or shower.
• Install water-saving devices like the PUB’s free water-saving kit which can help reduce monthly consumption by up to 5%. 
• Keep your family’s monthly usage to under 40 cubic metres – anything above this is subjected to higher water tariff, water conservation tax and waterborne fees.

Monthly phone, mobile data, electricity and gas bills can also add up. Evaluate your respective plans and downsize or switch to plans that better suit your usage patterns.

For instance, if you go to the office five days a week, you could save on mobile data by using your company’s wifi to text, make calls or surf the internet on your handphone and rely on a S$5 2GB data plan for the rest of the time.

Another thing that works for me is bundling several services. For instance, parking your residential phone, mobile phone, internet and streaming subscriptions under a single provider could qualify you for greater discounts on your monthly bill. Loyalty saves you money!

Inflation hack #5: Refinance high-interest loans

If you took a home loan from a bank and the interest rate is shooting through the roof, talk to your bank about repricing your loan or shop around for a loan package that can help you save on interest. With some loan packages, you can lock in a fixed interest rate over a certain number of years, which eliminates surprises in your monthly repayment amount.

Warning: Before you refinance your loan, always check if it comes with hefty penalties and fees, in which case, you may be better off sticking with your current plan.  

Inflation hack #6: Know the best times to book your holiday flights

Everyone needs a break but your vacay shouldn’t break the bank. You probably know that airfares are generally cheaper if you book four to five months in advance. Aside from that, follow my four tried-and-tested strategies for scoring cheap flight tickets:

• Ditch weekend and public holiday flights – Mondays, Tuesdays and Wednesdays tend to carry lower airfares, as do overnight flights, which also eliminate spending on a night’s overseas accommodation.
• Don’t ignore connecting flights – while there are direct flights to San Francisco for instance, adding a stop in, say, Taipei could save you something like S$500 (provided you’re not in a hurry to get there).
• Consider landing in smaller airports – this could mean cheaper fares due to lower airport taxes as compared to more popular airports, not to mention faster customs clearance with fewer passengers!
• Make friends with price alerts – it means more emails, but setting price alerts on search engines well ahead of time means you’ll be notified when there’s a drop in airfare and can jump at the opportunity, rather than regret missing it later.

For more dollar-saving travel hacks, check out this article.

Inflation hack #7: Barter trade

If you need something and it doesn’t have to be brand-new, bartering with family is a no-cost solution. For instance, if your kid recently upgraded from his cot to a bed and your cousin is expecting a child in a few months’ time, you could exchange the cot for your cousin’s unused massage chair that you’ve been eyeing for a while. It’s a win-win for you both and not a single cent needs to be spent. You’ll be protecting the planet too!

Why limit your bartering network to people you know when expanding it could open up a bigger variety of items to trade? There are a number of online platforms that facilitate these cashless exchanges for goods and services between complete strangers, but check that they’re legitimate first.

Bonus inflation hack: Use insurance to cushion the impact of rising prices

You might not have heard this before, but you can use insurance to mitigate the effects of inflation over time.

Healthcare inflation is especially worrying as it rises faster than standard inflation – usually driven by increased usage and the high cost of new medical technology. According to WTW’s 2024 Global Medical Trends Survey, medical costs within Asia Pacific are expected increase in 2024 by an average of 9.9%.

Long-term care insurance plans that give escalating payouts can help you better manage medical inflation as your assured monthly benefit amount increases by a fixed percentage annually until a claim is made. For instance, a S$1,000 monthly benefit escalating at 3% annually will grow to S$2,427 after 30 years, which would better keep up with severe disability costs like hiring a caregiver or installing a wheelchair ramp which would’ve increased tremendously by then.

Certain life insurance plans help you hedge against lifestyle costs that increase over time, too. If you have life insurance coverage that’s equivalent to the recommended nine to 10 times your annual salary, it should sufficiently cover your dependants’ needs if death or terminal illness were to happen this year or next. However, this same sum might not cover much in 15 years’ time.

Remember the shrinking effect of time on your purchasing power I mentioned earlier? This “old” coverage amount might also be impractical when you enter certain key life stage events.

There are life insurance plans that allow you to boost your coverage amount at certain key life stage events when expenses typically go up, such as having a newborn or buying a property, without need for health underwriting. In other words, you avoid the hassle of underwriting to upgrade your existing policy, or buying a new plan for additional coverage.

Keep in mind that health conditions may develop when you’re older, which could lead to higher premiums or coverage exclusions.

Next to medical costs, education costs would be a concern if you have kids or intend to upskill yourself. According to the Consumer Price Index, education costs increased 75.75% between 2002 and 2022. Hypothetically, this would mean that annual school fees of S$10,000 in 2002 would’ve cost S$17,575 in 2022. Savings plans can help you build a fund for future education needs. Go for those offering higher interest rates than the standard inflation rates.

A final word on rising prices

We can’t escape inflation, especially in a growing economy, but adopting strategies to tackle rising prices could mean that it doesn’t interfere with your day-to-day expenses and financial goals, or cause severe debts.

As you put these strategies into practice, remember that money is for enjoyment too, so give yourself and your loved ones a treat every now and then, too!