The inflationary cycle we are now in is causing anxiety for many consumers. Then, there is the prospect of a future recession. It is enough to make one’s head spin.
But today, for now, we are struggling with inflation, and taking steps to mitigate its effect is a top priority for many. Here are three suggestions that can help:
Set a Budget
Prepare a budget and stick to it. It is easy to deviate from your budget, but every dollar counts when there is inflation.
- First, write down all of your monthly expenses. Start with the essentials such as food and housing, and then add discretionary spending such as trips to Starbucks and eating out.
- Second, compare your expenses with the amount you bring in each month. If your expenses are higher than the amount you bring in, it is time to cut costs.
- Third, look carefully at your list to determine which expenses can be cut.
Here are some costs you may be able to reduce:
- Automatic renewals: Whether for news and media, services, membership in an organization, or something else, it is easy to let these payments slip by. This is a good time to take stock of your subscriptions and cancel the ones you do not need.
- Phone, internet, and cable: Many providers bundle these services at a price that is lower than if you bought them individually. In addition, providers usually run special promotions. It is a good idea to call your provider at least annually and ask whether your monthly bill can be lowered.
- Keep in mind that you may need to rethink the whole package idea if you have given up your home phone or are watching streaming stations more than cable.
- Cellphones are another area where savings can be found. Call your provider and ask whether there are ways you can lower your monthly bill.
- Car and home insurance: Revisiting your insurance coverage could also unlock savings, especially if you have been with the same insurance company for years. It is easy to ignore increases when the summary of services arrives prior to the policies’ annual renewal. It is possible that getting a quote from a competitor can reduce your costs.
Decrease Credit Card Debt
Turning to credit cards to help pay for expenses seems like a good immediate solution — but it can make things worse, especially if you are having difficulty making timely payments. Interest is high and late fees are steep. Also, paying only the minimum amount due lengthens the time it will take to pay off the card.
If possible, switch to a 0% interest balance transfer card or a card that offers a period of time (generally 12-24 months) with 0% interest. Alternatively, you can ask your card issuer to lower the interest rate.
Use menu planning, cash-back credit cards, coupons, rebates, and apps
- Menu planning. Prices are higher than they were last year for many food products. If you are trying to cut costs, one of the simplest things you can do is plan out a weekly menu and make a shopping list from that. Menu planning helps prevent you from purchasing unnecessary items or throwing away food. As you plan, include lunches for work or school. Buying meals can be adding extra expense to your budget.
- Cash-back credit cards. Many credit cards offer cash back when you use the card. These cards often offer additional cashback in specific categories each month or each quarter. For example, a card that offers 1% cash back may offer 5% cash back on groceries for the months of June through September. Taking advantage of that puts cash in your pocket.
- Coupons, rebates, and apps. Many stores offer coupons and/or rebates specifically for online shoppers. Often these deals are available only when shopping in the vendor’s app. Apps such as Groupon offer deals at local shops, and Rakuten offers a rebate for shopping at certain vendors.
Other ways to cut costs include:
- Have a yard sale to sell things you are not using. Or sell them on sites such as eBay, Facebook Marketplace, or Craigslist.
- Buy clothing on discount sites.
- Use sites, such as GasBuddy, to find the best gas prices in your area.
- Carpool whenever possible.
- Schedule errands in an organized way so you are not making repeated trips to the same area.
Before you take the final step and set your new budget, compare that budget to the one you had a year ago. This will allow you to identify the areas in which inflation is affecting you the most and help you plan efficiently.
Need help setting up a budget?
Give Lang Allan & Company a call if you need help setting up a budget for your business, or employees. We’d love to help.