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get ready to pay more for your home

4 ways to mitigate rising costs

Despite being inevitable, rising costs can have a smaller impact on your wallet if you know how to deal with these increases.

Unless your income increases accordingly, it’s time to look at your financial life and make some changes.


Negotiate with the bank now

This is the time to sit down with your account manager and analyze different scenarios to control the impact of rising interest rates on your monthly fee. Increase the credit payment period, negotiate the spreadlife insurance, amortizing credit are issues that should be on the table for discussion.

As for interest rates, if you have already taken out a loan, you can try to fix the rate, but be sure to analyze whether this is in fact a good solution for your case. Think long term and remember that your bank will allow you to switch to a fixed rate but will never let you switch back to a variable rate.

If your account manager is reluctant to negotiate, consider transferring your home loan to another bank. In most cases, shifting debt from one institution to another translates into more advantageous terms.

See too
Renegotiating home loans: new rules in force


Analyze expenses and understand how to cut

Cutting back on expenses may seem like commonplace. However, it is the easiest and most immediate way to have more money available throughout the month, even with rising costs.

Analyze your expenses well, without forgetting the phantom expenses and start by cutting what is too much. That is, those expenses that are totally expendable, including paying for services that you do not use.

Then evaluate essential expenses and see how you can reduce them. Renegotiating insurance, switching to the regulated gas market or comparing tariffs from electricity or telecommunications providers are some ways to lower monthly expenses.

And, of course, there are small daily habits that can add up to big savings on your monthly bills.


Enjoy benefits and low cost alternatives

In times of rising costs any help is welcome. Therefore, it is important to know the support available to reduce expenses.

In addition to the support measures already announced by the Government, the social energy tariff, the social water tariff or the internet social tarifffor example, are measures that families with lower resources should take advantage of to face rising costs.

Even if your income does not allow access to social tariffs, there are solutions low cost for almost everything: from white labels to bank accounts with minimal or no commission services, passing through various products and services, there are many options to spend less.


Create an emergency fund

If you don’t already have one bottom of eemergency, take advantage of the savings you’ve made on expenses and services to create one.

The emergency fund is, as the name implies, a savings account that allows you to cover a few months of expenses. How many? Start by thinking about saving the equivalent of your expenses in a month and from there you can think about creating a emergency fund for 3, 6 or 12 months­čçž­čçĚ

The two basic rules of emergency fund

There are two fundamental rules regarding the emergency fund. The first is that this money is really for emergencies­čçž­čçĚ Therefore, you must resist the temptation to use that savings for other expenses.

The most likely thing is that you don’t replace what you took and that nest egg ends up disappearing. This is one of the reasons not to keep this fund at home, because it will be easily accessible.

Another rule is that the emergency fund must be available in case any urgent expenses arise­čçž­čçĚ Thus, and although it may be more profitable to invest that money in a PPR, Savings Certificates or a term deposit, it is preferable to have it in a savings account, so that you can access the amount you need almost immediately.

Invest or save?

While making investments is a good way to make your money, creating an emergency fund should be the first step. You can save a little each month and reinforce that savings with a portion of the IRS refund or even the Christmas subsidy and/or holiday subsidy.

So, if rising costs reduce your monthly budget, you’ll always have savings to use in case of illness, unemployment or other unforeseen circumstances.

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