Surviving the Sri Lankan economic crisis: 5 strategies
Sri Lanka’s economic crisis has affected everyone in the country, at all levels. Soaring prices, shortages all around, and mounting mental pressure have us looking for ways to save a few rupees wherever possible. Want to know how? In this article, we’ll explore 5 strategies you can use to help you get through the current economic crisis in Sri Lanka.
Start a budget—even a simple one
If you have already budgeted your income and expenses—that’s great! You’re ready to hit the ground running. But if you haven’t, here’s why you should start budgeting and how to do it.
Why should you budget? Because it prevents you from overspending. Even a simple budget is better than no budget. It’ll help you start each month with every probable expense accounted for, so there’s very little chance of you running out of money halfway between paychecks.
Here’s how you can get started with budgeting:
- Determine your income (your monthly take-home after all deductions like EPF/ETF/etc.)
- Determine your expenses (both needs and wants—more on this later)
- Choose your budget plan (zero-budget, envelope system, or the 50/30/20 plan? – this depends on how much you want to save on a regular basis and your overall spending)
- Stick to the budget and track your progress—this is super important.
- Change and tweak your budget as time goes on
The main point of a budget is to help you be more financially responsible, so you don’t have to over complicate things. Keep it simple and stick to it.
You can learn more about the above steps and different budgeting plans here.
Prioritize needs vs. wants
As you start budgeting, you’ll come across two types of expenses: needs and wants. A need is something you have to pay for (food, rent, fuel, medicine, and so on). On the other hand, a want is exactly as the name suggests—you want it, but you can go without.
Obviously, you should prioritize your needs and cut back on wants when money is tight. Start your budget by allocating funds for needs first.
That being said, you shouldn’t completely cut out wants either. Whether it is budgeted for or not, you WILL end up spending on things you want – sometimes you just can’t resist.
Also, buying nice things and treating yourself once in a while is essential for your mental health during these times. Hence, it’s simply better to budget for your wants as well, than cutting them all out until you break and overspend. So how do you balance both needs and wants?
You can do so using the 50/30/20 budgeting rule we mentioned earlier. Allocate…
- 50% of your take-home income on needs
- 30% on wants
- 20% on savings
With 50/30/20 you’ll even set aside some savings for a comfortable emergency stash!
Pay off high-interest debt, fast
Credit card debt, loans, overdue bills—whatever it is, borrowing money in Sri Lanka is becoming ever more expensive. Time is of the essence here since interest rates are going through the roof. The sooner you pay off your debts the better.
You might not have the funds on hand to pay it all off in one go, so you need to be strategic about how you pay off your high-interest debt.
There are two ways you can do this, using the avalanche method or the snowball method. This sounds technical but here’s what it means:
- The avalanche method: pay off your most expensive debt first, i.e. the one with the highest interest.
- The snowball method: pay off your lowest balance first, then roll that same payment towards the next smallest balance.
You can learn more about the avalanche method vs. snowball method in this excellent article.
Maintain your health, home, and ride
What common thread unites your health, your home, and your vehicle? You need all three to be in top shape. And if any one of them breaks down, you’re looking at expenses that can cripple you financially for a long time.
That’s why, in times like these, you must take time to care for all three. It’s tempting to forego any repairs, servicing or doctors appointments when your budget is tight. But remember: if you don’t schedule time for maintaining your health, home, and ride, they will schedule it for you. And it won’t be at a time that’s convenient for you.
Consider your mental health as well as your physical health. Keep your home clean and sanitary; don’t let small repairs and fixes go unattended. The same applies to your vehicle—it’s cheaper to have the oil changed today than to have your engine cleaned later.
Think long term; you’ll find that these smaller expenses justify themselves.
Look for coupons and discounts whenever possible
A discount coupon can also soften the blow of an expense on your wallet. But finding coupons reliably (and without getting scammed!) is often a lot of work. No wonder people skimp out on this money-saving strategy.
SLASH can help you out in this department. As Sri Lanka’s first Buy-1-Get-1 Free coupons app, SLASH is a platform offering users over 300+ deals and discount coupons from vendors across Sri Lanka. The app can help you save over a million rupees in just one year.
The bottom line
In addition to the above tips, keep an eye out for sales and giveaways, especially for one-time purchases you’ve been planning to make for a while.
Try to look for more cost-effective alternatives for your regular purchases and make sure not to buy above your budget, simply out of fear of future price hikes.
Getting through this economic crisis will need you to take a long, hard look at the way you earn and spend money. Yes, it’ll take some getting used to. But if you can get through the learning and adapting phase, you will survive the crisis and come out of it stronger than most.