Money management strategies during inflationary times
The inflation reading from January 2021–January 2022 was a whopping 7.5%. As a result, inflation worries are now a leading cause of financial anxiety for many households as purchases like groceries, gas, furniture and used cars have spiked in cost.
That said, there are strategies you can implement right now to lessen the stress and financial bite on your day-to-day finances. Here are some tips to help you alleviate the cash-flow crunch you might be experiencing during these inflationary times.
Household expense strategies
Ease the budget pinch on the goods you buy by seeking lower cost alternatives. Often times, generic brands carry the same or very similar ingredients and quality as brand-name counterparts. Be discerning about the value you are getting for the price of any product.
To help you get organized, use an expense worksheet to list your expenses or, if you are more of a technophile, a budgeting app is a good place to start. Then one by one, seek out an alternative, comparison shop or perhaps eliminate something you don’t need.
Put subscriptions in check. Run a check on your subscriptions so that you can eliminate the ones you never or just occasionally use. Apps like Truebill, AskTrim, PocketGuard (also a budget app), and Mint (comprehensive budgeting app) are popular among subscription trackers.
Implement these 3 meal hacks
- Cook 2-3 vegetarian meals per week. This can save you over $60 a month and can yield amazing health benefits.
- Consider buying cheaper cuts of meat. They can provide great quality and often better flavor. There is very little a slow cooker or multicooker can’t do.
- Minimize food waste. The average American household of four wastes over $151 of food per month! Meal planning can go a long way, as well as freezing and/or properly storing food. Finding alternative uses for fruit and veggies that aren’t being eaten while still fresh and being mindful of true expiration dates can also help.
Hold off on larger purchases that are being impacted by supply chain issues. Things like new cars and furniture have inflated in price. Wait for these to level out and keep an eye out for discounts as supply chain bottlenecks start to ease!
Financial expense strategies
Adjust debt repayments. If you are making larger than minimum payments, consider temporarily reducing these. If you are already there and need more help, consider reaching out to lenders to adjust minimum payments or to negotiate interest rates. This can give you some breathing room while you work on the other areas of your expenses to help address shortfalls and get back into a positive cashflow.
Adjust withholdings. If you are typically receive a large tax refund, it would work to your advantage to reduce withholdings and receive more in your paycheck to address any cashflow crunch issues plus you aren’t giving the IRS a free loan on your money.
Increase deductibles on your insurance policies and comparison shop. Explore increasing the deductibles on your insurance policies like auto, homeowners, renters’ etc. Taking on extra financial risk via a higher deductible will turn into immediately lower premiums. Just make sure you have enough in savings to cover the higher deductible if something does happen. While you are at it, comparison shop to see if you can get even lower premiums from your current insurance company or get them to match lower offers and explore bundling insurance policies with the same provider to get steeper discounts!
Longer-term inflation resilience
Take meaningful action and invest in yourself and your career. Warren Buffet has said that your own career can be the best way to protect against rising prices. It’s not only about what you earn now but what you can earn in the future. Consider taking free or low cost online courses or working with a mentor to bump up your current skill set or learn a new skill set that is highly valued.
Putting it all together
High inflation won’t last forever, but it can stick around long enough to cause stress that impacts our short- and long-term decisions. Use these tips to help alleviate any immediate financial stress and set you up for the future. If you are having trouble controlling your impulses or need someone to talk through how to prioritize and apply these tips to your situation, please reach out to a qualified financial professional or a financial coach through your employer’s financial wellness program.