August 19, 2022
Coping with Inflation? Be Budget Aware.
Inflation continues to put pressure on household budgets. From groceries to gas, record breaking inflation means the purchasing power of your money is decreasing each month. Follow these steps to keep “budget aware” to help navigate this period of high inflation, however long it lasts.
- Take Inventory of Your Full Financial Picture. Has your household income changed? Have you adjusted your budget for rising groceries, transportation, or other expenses? Check your existing budget to see where you stand and where your money is going. If you don’t have a budget, it can help to create a simple spending plan or roadmap of monthly expenses. A good place to start is to use resources like money management in digital banking to track your monthly income against current expenses.
- Continue to Build an Emergency Fund to tap into when unexpected circumstances arise like a medical expense or costly home repair. An emergency fund helps reduce the chance of taking on debt to cover an unplanned expense. It might be tempting to pause monthly savings as rising prices take a bigger bite out of your monthly budget but resist the urge. Put savings on autopilot with each paycheck. Even a small amount will add up over time.
- Prioritize Monthly Spending in a Time of Rising Prices. Rethink certain monthly expenses such as subscriptions or streaming services. According to researchers, the average household has 4.5 streaming services and spends an average of $55 on them a month. This may not seem like much, yet $55 a month adds up to more than $600 a year. If you’re trying to cut expenses in the face of higher prices, ditching underused subscriptions can be a good place to start. As essentials get more expensive, figure out your new baseline. Limit credit card use and curb discretionary spending (dining out, entertainment).
- Monitor Debt, especially as interest rates rise. Paying off high interest credit card debt saves you money in interest, improves your credit score, and frees up room in your budget. Choose a debt payoff strategy that works for you and your situation.
- Shop Smart. Research the best sales, coupons, and specials, especially on products that are low in inventory.
- Check the dollar stores for deals on household items and stock up on those items where possible.
- Bulk retailers or wholesale clubs might be a good way to stock up on items in large quantities for a lower per-use cost.
- Strategically plan your higher cost purchases.
- Swap out brand name items for generic as much as possible.
- Keep Tabs on Your Credit History. In times of rising prices, it pays to keep tabs on credit history, which is used to calculate your credit scores. The three-digit number of your credit score helps determine whether lenders approve you for new credit and what interest rates they offer. Utilize our Credit Score feature in digital banking to keep up with your score daily.
Related content: 5 Common Questions About Your Interior FCU Account After Retirement
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