Five things to do when income doesn't match cost of living

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Five things to do when income doesn't match cost of living

 Five things to do when income doesn't match cost of living
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Highlights

  • The rise in consumer prices without equal appreciation in wages can be troublesome.
  • Budget plays a critical role in curbing unnecessary expenses.
  • It helps to figure out what is needed and what can be easily done away with.

The term cost of living is used to compare how costly it is to survive in one city compared to another. So, to survive in an expensive city, one needs to have a higher salary. In short, the cost of living is tied to wages.

With time, the cost of living is bound to surge, as everything from food to healthcare increases. But the problem arises when wages don’t rise in accordance with prices of utilities. Thus, wages must also surge as living expenses go up to maintain a steady financial situation.

However, the rise in wages depends on several determining factors. So, not all can expect a raise in salary with the rise in the cost of living. So, what should one do in such a scenario?

Here are five things which can be done if your income doesn't match the cost of living:

 Budget your expenses 

Budget plays a critical role in curbing unnecessary expenses during a month. It helps you to figure out what is needed and what can be easily done away with, at least till the income is muted.

However, it can be too boring for some people to sit down with a pen and copy and draft a budget at the start of each month. If you are one of them, try your hands at several budget-making tools or apps available on the internet. These apps can help to automate the entire budget. Once you are done with drafting the budget, you can update different costs accordingly.

Say no to unnecessary expenses 

Personal finance experts always advise spending within your limits. Sponsoring your unnecessary spends with credit cards is the worst option one can take up. Borrowing in the form of personal loans to pay for luxuries is something all should say no to. The best way to control the cost of living is to identify and cut unnecessary spends. For instance, you can cut down on frequent dine outs or shopping.

Find out recurring expenses 

There are several costs which are recurring and generally hidden in your budget. So, you should carefully identify such recurring expenses to increase your savings. These are such spends which can be curtailed without hampering your daily routine. You can cut down on several of your monthly, quarterly or annual subscriptions. Or you can simply change your subscription plans and opt for cheaper ones.

Cut down on housing expenses  

One of the biggest expenses for anyone is housing. Most people spend an average of 30% or more of their income on housing costs, much above the 30% figure recommended by financial experts.

So, housing costs can be lowered by sharing living space with your friend or friends. You can also think about giving up your paid parking space. You also have an option to carry out repairs on your own for a break in the rent.

Find income-boosting ways

You should think of ways to increase your income if you are still not able to reduce your expenses and your wages are not expected to be hiked anytime soon. Try developing a new skill that could help increase your funds. You can opt for freelance jobs or other part-time work.

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