Budgeting During Inflation

Pinching pennies is easier than you think with the right resources.

A man sits on the floor and works on his budget spreadsheet.

While history proves inflation isn’t permanent, rising prices with no end in sight is a challenge for everyone. Living during times of high inflation can cause even the savviest saver to sweat a little bit. While we can’t predict when the economy will shift again, we can prepare ourselves to ride the wave of high inflation by being thoughtful about our budget.

What is Inflation?

It’s important to understand inflation and that it affects all of us. Inflation causes prices of goods and services to increase, which means consumer purchasing power goes down and we feel we’re losing control over our finances.

While inflation can boost economic growth, it can also create a lot of hardships as people are forced to spend less and some are unable to afford basic necessities like child care, housing or groceries.

However, with a little creativity and planning you can regain the feeling of control over your finances.

Needs, Values, Wants 

How well do you understand your spending habits? Now is a good time to sit down, chart out your expenses and decide which categories they fall in. (And know that category definitions can differ for different folks.) Here’s an example:

Needs: Basic Groceries, Housing, Healthcare, Transportation
Values: Organic foods, Housing in a particular neighborhood, Gym membership, Popular brand of car
Wants: Special treats, High-end appliances, Workout gear and equipment, Car loaded with features

Start a Budget Plan

Now that you’ve jotted down and categorized your expenses, you’re ready to create a budget to track your income and expenses.

Even a basic understanding of your monthly income and expenses is better than nothing – and tools like online banking services and mobile banking apps that track purchases and income can make the process easy. Try a simple budget calculator for a quick look, or let this budget coach guide you.

Detailed or simple -- choose whichever style of budget is best for you. The key is to start.

Boosting Your Budget

If your budget needs a boost, you’re not alone. Two steps help ease the pain points of inflation:

Evaluate your expenses and trim where you can: Nobody likes to hear it, but the best way to boost your budget is to curb your spending. Look at what you’re spending money on each month and find areas where you can cut back. Here are the usual suspects and helpful workarounds:

  1. Coffee. Instead of that daily cafe drink, make coffee at home and treat yourself to the fancy stuff every other week.
  2. Takeout/dining out. What’s for dinner? Avoid the 5:00 scaries by making a weekly meal plan and coordinating your grocery list. Once it becomes a habit, you’ll wonder why you didn’t start doing it earlier. Make takeout/dining out a once-a-month special treat.
  3. Cable/streaming services. Choose one or two services you use regularly. Consider the vast (free!) media collection available through your local library.
  4. Car. Is it possible to utilize public transportation or carpool? Can your household go down to one car? When was the last time you shopped your car insurance rates?
  5. Cell Phones. Chat with your provider and try negotiating a lower bill. Avoid upgrading until absolutely necessary. Could you cut your home internet services and use the unlimited service through your phone instead?

Find more income: It’s easier said than done because we all have only so much time in our days but bringing in more income is a great way to boost your budget during inflation.

  1. Take on a part-time job or side hustle
  2. Ask your boss for a raise
  3. Consider changing jobs and starting at a higher pay grade
  4. Invest in a secure fund that generates returns

Inflation Survival Hacks 

We’ll leave you with a few quick tips to make your spending plan even more inflation-friendly:

  • Shop with a list and stick to it
  • Buy store brands instead of name brands and bulk for non-perishables
  • Eat less meat
  • Compare gas prices at warehouse clubs, grocery stores and gas stations
  • Select pickup instead of delivery for groceries and takeout
  • Have friends over for a potluck dinner (save on parking and dining out)
  • Find ways to work leftovers into new meals

Inflation Isn’t Forever 

We can’t predict the ebb and flow of the economy, but we can plan around it and stay optimistic knowing that inflation won’t last forever. Check out our page on budget health. If you’re worried about managing your debt with rising interest rates, schedule a free, confidential Credit Check-Up with a financial specialist.

And remember, once you have a solid spending plan in place, it will serve you well through inflation and beyond.

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