During times of high inflation, here are some budget strategies you can use to help stay financially sound during these times.
Track Your Spending:
- Know Where Your Money Goes: Before you can make any adjustments, you need a clear picture of your spending habits. Track your income and expenses for a month using a budgeting app, spreadsheet, or even pen and paper. Research budget apps here – Research budget apps at The Best Budget Apps for 2024 – NerdWallet. Be honest with yourself about what you need and what you want. Needs reflect those things we need to survive. Wants can often wait for future paychecks.
Cut Back on Discretionary Spending:
- Identify Areas to Trim: Once you see where your money goes, pinpoint areas where you can cut back. This could include dining out, entertainment subscriptions, impulse purchases or those small daily habits that add up quickly.
- Embrace Frugal Fun: Find free or low-cost alternatives for entertainment. Explore local parks, museums with free admission days, or board game nights with friends. As the weather gets warmer, there are often many outdoor, low cost events.
Stretch Your Groceries:
- Plan Your Meals: Plan meals around what’s on sale and utilize coupons. This reduces impulse purchases and food waste. This is an area where most people say they improve their budget and boost savings.
- Consider Generic Brands: Store brand staples are often just as good as name brands at a fraction of the cost. Shop at discount grocery stores in your area such as Price Rite or Aldi.
- Embrace Meatless Meals: Meat can be a significant expense. Try incorporating more vegetarian meals into your diet. Try to identify more high protein items like peanut butter, legumes, and tofu.
Be Strategic with Debt:
- Prioritize High-Interest Debt: Focus on paying down credit card debt first, as high interest rates can quickly magnify the cost of borrowing. Start with those credit cards with the highest interest rates first. Know that you can contact your creditors if you are having trouble making minimum payments. They may be able to work with you to temporarily lower your interest or your payment amount to help you catch up.
- Explore Balance Transfers: If you have good credit, consider a balance transfer card with a 0% introductory APR to temporarily reduce your interest charges.
Boost Your Income (if possible):
- Explore Side Hustles: Look for ways to generate extra income, like freelancing, online gigs, selling unused items, making deliveries, etc. Check out 25 Passive Income Ideas To Help You Make Money In 2024 | Bankrate. Also, if inflation is eroding your purchasing power, consider having a conversation with your employer about a raise to keep your salary competitive.
Additional Tips:
Shop Around for Better Deals: Compare prices on everything from groceries to insurance to ensure you’re getting the best value.
Review Subscriptions: Audit your monthly subscriptions and cancel any you don’t use regularly.
Utilize Cash: Using cash for everyday purchases can help you stay more mindful of your spending. Multiple studies show that we spend less when using cash instead of a credit or debit card.
Research Ways to Lower Utility Costs:
Adjust Your Thermostat: A programmable thermostat allows you to adjust temperatures when you’re away or sleeping. Lowering your thermostat in winter and raising it in summer can significantly reduce energy use.
Unplug Unused Electronics: Even electronics in standby mode draw a small amount of power. Unplug chargers and devices not in use to eliminate “vampire energy drain.”
Wash Clothes Smarter: Wash clothes in cold water whenever possible and air-dry laundry when weather permits.
Shorten Showers: Every minute counts. Reducing shower time can significantly lower hot water usage and lower water heater temperature: Most water heaters are set too high. Adjust the thermostat to 120°F (49°C) to save energy without sacrificing comfort.
Fix Leaks: A leaky faucet or dripping showerhead can waste a lot of water and energy. Repair leaky fixtures promptly.
Switch to LEDs: LED lightbulbs use significantly less energy than traditional incandescent bulbs and last much longer.
Embrace Natural Light: Open curtains and blinds during the day to maximize natural light and reduce reliance on electric light
Consider Alternative Billing Options: Some utility companies offer time-of-day billing where rates fluctuate throughout the day. This can be advantageous if you can shift energy usage to off-peak hours.
By implementing these strategies, you can tighten your budget and make your money stretch further during times of high inflation.
If you’re dealing with high interest debt payments as well, see what you can save with Parachute’s Debt Management Plan https://parachutecreditcounseling.org/dmp-calculator/
Would you like to meet one-on-one with one of our Financial Counselors to talk specifically about your budget? Check out our Financial Coaching Session https://parachutecreditcounseling.org/services/credit-budget-counseling/#financial-coaching or call 716-712-2060.
