When inflation began to rise across the U.S. following the COVID-19 pandemic, many people hoped it would only prove to be a temporary challenge. Unfortunately, the higher costs for food, utilities, and general living expenses have not fallen as quickly as many expected.
With inflation rates in 2022 at a 40-year high, it’s clear that consumers have to look closely at their finances and develop preventative strategies.
The most challenging part about living with inflation is deciding what to cut, keep, and budget with minimal compromise. It may be easier for those with more wealth to spare, but everyone will need to adapt to America's rising cost of living.
Here are some tips to help you sidestep inflation in the most cost-effective way possible. By addressing your core needs and building from strengths, you can lower inflation's impact on your financial security.
Identify Where Inflation Affects Your Budget the Most
No one loves combing over their budget, but attention to detail will be your greatest asset in proactive planning. Start by reviewing your expenses over the last four to five months. Pay the most attention to any increases to your rent or mortgage, insurance, utility bills, and groceries.
When you see how much inflation is affecting your bottom line, you can start to make modifications to accommodate them more easily. It shouldn’t be a matter of just spending more and saving less; a long-term solution involves making changes that protect your income and continues to include a savings plan.
Plan Out Your Purchases
With inflation inching toward 8%, it's essential to plan every purchase ahead of time. Review grocery store weekly ads, use, make a shopping list and stick to it. Plan your meals around sales items and postpone any larger purchases until prices start to lower, or you can get a great deal.
You may also decide to order some of your household essentials and groceries online through a myriad of available apps. These can help you cut down on impulsive or unexpected purchases, but be mindful that prices may cost more online than in-store.
Comparison shopping will give you the most significant advantage.
Avoid Big-ticket Items Until Prices & Rates Drop
Buying a house or car may be better left until rates fall and the market for these items stabilizes. Ultimately, you want to avoid paying more than anything is worth. Inflation can cause costs to surpass value, so making large purchases when prices are at their peak may ultimately cut your ROI.
Think of the present as a good time to focus on savings. The more you put away now, the more options you'll have in the future.
Use Loyalty Cards & Online Discount Apps
Browser extensions like Honey can help you get the best deals from thousands of stores online. Thanks to exclusive discounts and points, supermarkets' membership programs and loyalty cards can save you money.
If your credit cards have any rewards points or money-back offers, make sure to take advantage of them as well. You can often do this with a simple click and be on your way to saving.
Negotiate Debt & Insurance
If you have any outstanding debts, reach out to lenders or collections agencies. Negotiate a better payment plan to stay current without compromising your monthly income.
When it comes time to renew any insurance policies, compare quotes from multiple providers. Premiums can fluctuate even more during periods of high inflation, so be sure to explore all your options to get the best deal.
If you would like help navigating inflation, we’re here to help. Please contact us to schedule a call with one of our financial advisors.