During times of rising inflation, here are some budget strategies you can use to help stay financially sound.
Track Your Expenses and Spending Habits:
- Know How Much You are Spending and Where It is Going: Before you can make any helpful 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 at https://www.nerdwallet.com/article/finance/best-budget-apps. Be honest with yourself about what it is you truly need and what you want. Be real about this for maximum effect. Needs reflect those things we need to survive like food, clothing, medical care and shelter. It’s a matter of degree! For example, we all need to eat, but we can choose prepared meals at home based off of a grocery list versus eating out at a restaurant several times a week. Wants can often wait for future paychecks.
Cut Back on Variable Spending:
- Identify Areas to Trim: Once you see where your money goes, pinpoint areas where you can cut back and eliminate those pesky budget leaks! Think for a moment of leaking pipe under your sink. After you place a bucket there for (even a small) leak, and come back 3 days later, you will find that bucket is nearly full of water and heavy. It’s the same impact on our budget with the dollars flowing out. Our leaks can include regularly dining out, hidden fees, entertainment subscriptions, impulse purchases or our small daily habits that add up quickly. It also is eye opening to run the numbers and see what we are actually spending.
- Embrace Frugal Fun: Find free or low-cost alternatives for entertainment. Explore local parks, plays or shows at high schools or colleges, 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 can greatly tighten their budget and boost savings to “pay themselves”.
- 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. Even check out dollar stores for staple items.
- Embrace Meatless Meals: Meat can be a significant expense. Try incorporating more vegetarian meals into your diet. Identify more high protein items like peanut butter, legumes, and tofu and eggs when reasonably priced. Stock up when these items are on sale.
Be Strategic with Debt:
- Focus First on High-Interest Debt: Focus on paying down credit card debt first, as high interest rates can quickly increase 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. The sooner you address, the more you save.
- Explore Balance Transfers: If you have good credit, consider a balance transfer card with a 0% introductory APR to temporarily reduce your interest charges. Be disciplined and use the new card for balance transfers only and pay it down before the introductory rate ends. This is critical!
Boost Your Income (if possible):
- Explore Side Hustles: Look for ways to generate extra income, like freelancing, online gigs, selling unused or unwanted items, making deliveries, etc. Check out https://www.bankrate.com/investing/passive-income-ideas. Also, if inflation is eroding your purchasing power, consider having a conversation with your employer about a raise or extra hours to keep your salary competitive. Use that extra money to pay off debt or build savings, even very small amounts of savings matter in the long run.
Additional Tips:
Shop Around for Better Deals: Compare prices on everything from groceries to insurance to ensure you’re getting the best value. This helps you avoid impulse buying if you prioritize your research
Review Subscriptions: Audit your monthly subscriptions and streaming services and cancel any you don’t use regularly even if you need to do this temporarily.
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. When you do use cash, save all that change.
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 often 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. Some folks actually set a timer!
Fix Leaks: A leaky faucet or dripping showerhead can waste a lot of water, energy and money. 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 for things like running a dish washer and washer/dryer.
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.
