Facing price hikes in 2023

Last year (almost to the day), I started this blog, and the first topic I covered was the soaring prices in Israel. Little did I know that in the coming year, we would experience the roughest times since 2012 or perhaps 2008. In my first blog, I gave a few thoughts and tips on how to better manage our money in the hope that the situation wouldn’t get any worse, yet I was wrong.

This past year has presented an even more significant financial challenge for many households across the board in Israel, with families with young kids or teens, students having to cope through the academic year, young couples struggling to find affordable housing, with pensioners having to manage with less, and everyone constantly having to learn to prioritize their expenses. In addition, inflation and the rising cost of living have drastically impacted our budget, forcing us to check bills and carefully observe how much we spend on food, electricity, gas, or even how much we pay for a small cup of coffee.

The latter is actually, quite optimistic. We’ve become more aware of how much we spend, and some of us are more likely to regularly check our bank account to explore whether we can cut back or eliminate expenses to stay on track with our budget.

On the other hand, more Israelis are now facing debt and have taken more loans at a higher cost due to the substantial increase in interest rates.

Over the past six months, Paamonim has experienced a 39% growth in households requesting our help, many of whom cannot resolve their financial struggles alone.

So how do we manage our money during such harsh and challenging times?

 I suggest that we all return to the basics.

Take a hard and realistic look at your expenses. Create a budget that correlates with your income, considering the updated cost of living and making room for prioritization. Determine what is important and spend your money accordingly. You will likely find expenses you can reduce. One phone call can save hundreds of Shekels, so it is worth your time to explore the terms and conditions of the various service providers and negotiate better terms in your favor.

On the other hand, you could increase your income, even temporarily, to help make ends meet, pay back loans, or reduce debts. Discuss this all, with your partner and older kids (if relevant) to make this a joint effort. Make sure to make a plan that you all agree upon and ask for help if needed.

The plan and budget will set boundaries, but will also allow you to manage your money according to your personal desires and lifestyle. Let’s hope that the coming year will bring everyone easier and improved financial times.