Eight Ways to Reduce Inflation’s Sting on Your Wallet

When the overall price of everyday goods like gas and food continue to rise over an extended period of time, this is called price inflation. And it can hurt your household finances because your money doesn’t go as far as it previously did. While you can’t control the larger economic forces that cause inflation, you can control your reaction to it by making the following spending adjustments that help lessen its sting. And the quicker you make these changes, the easier it will be to weather a period of inflation, whether it’s short- or long-lived.

1. Use a budget.

Without a structured budget that you regularly track, it can be difficult to manage the rising price of consumer goods that are shrinking the buying power of your hard-earned dollars. If you don’t have a budget, create one with these steps:

• Add up your monthly income to determine how much money you have to work with.
• Identify the monthly costs of your needs, the things you can’t live without like housing, utilities, transportation, groceries, insurance, healthcare and childcare.
• Add up your needs and subtract the total from your income.
• Decide how you want to split the remainder of your income between your savings and discretionary spending on things you want but don’t need, such as entertainment.
• Make sure your savings allotment is helping you build or maintain an emergency fund with three- to six-months’ worth of expenses so you can more easily handle unexpected bills.
• Figure out how you’ll track your budget, whether that’s on a spreadsheet or through a digital budgeting app, such as EveryDay, Mint or Wally.

Already have a working budget? Take a look at what you’ve allocated to your needs, wants and savings to determine if you need to adjust things due to rising prices.

2. Reduce unnecessary spending.

If you’re having a hard time balancing your budget based on your current spending habits, take another look at the discretionary items listed in your budget to find ways to cut back further.

Start by eliminating anything that you’re paying for but not really using. For example, do you subscribe to streaming or subscription services that go largely unused? Cancel them. Next, curb impulse purchases by always making and sticking to a list before shopping in stores or online.

Still coming up short at the end of the month? Then, it’s time to make some more budget adjustments, such as these:

• Make your lunch rather than eating out on workdays.
• Use the free workout room at your apartment complex and cancel your gym membership.
• Give yourself a manicure rather than visiting the salon.
• Enjoy movie night from your couch with homemade popcorn instead of going to the theater.

3. Comparison shop.

Prices may be going up everywhere, but they can still vary by retailer. For example, discount grocery stores like Aldi, Lidl and Save a Lot often have cheaper prices than full-service ones thanks to their no-frills environments and no-name brands. Wholesale membership clubs like BJ’s, Costco and Sam’s Club can be another price-conscious choice, especially if buying in bulk makes sense for your family.

These comparison-shopping techniques can help you save on things you need:

• Check weekly circulars for sales.
• Sign up to receive promotional ads from your favorite stores.
• Ask retailers if they’ll match another store’s sale price.
• Download a free price comparison app, such as BuyVia, Mycartsavings or ShopSavvy.

4. Take advantage of coupons.

Manufacturer and store coupons can help lower the price you pay at checkout even further. Here are three easy ways to successfully coupon:

• Clip paper coupons from newspapers or mailers.
• Register as a loyalty member at your favorite stores to access their coupons.
• Use a digital coupon app, such as coupons.com, or SnipSnap.

5. Delay big-ticket purchases.

Unless it’s absolutely necessary, hold off on buying a new appliance, piece of furniture or other big-ticket item when prices are unusually high. The same is true for high-demand products. For example, during the COVID-19 pandemic, supply chain issues have reduced car inventories causing the price of new cars to increase 12% and used cars to go up 41% between February 2021 and February 2022.

6. Eat less meat.

In that same timeframe, the price of beef rose 16%, whereas fresh vegetables only rose 4.3%. Filling more of your plate with veggies than with meat can save you money and improve your health, which has its own financial rewards. Even replacing red meat with chicken, whose price hasn’t risen quite as much, can help. And if you like foods like canned tuna, it’s gone up the least at just 2.8%.

7. Take public transportation.

When gas prices rise to new levels, the cost of getting to work takes a bigger bite out of your budget. You can alleviate this by taking the city bus, metro or light rail if available in your area. Or you can carpool with co-workers who live near you. The side benefit to either idea is that you’ll put less wear and tear on your car, lowering the need for things like new tires and reducing the chance you’ll need to replace your vehicle.

8. Monitor your accounts.

Don’t forget to keep a close watch on your financial accounts through your monthly statements or your online or mobile banking to make sure incorrect or fraudulent charges to your debit or credit cards aren’t also squeezing your wallet without your knowledge.

Inflationary periods don’t last forever. Stick to these tips and you’ll cope until prices stabilize and your money regains its purchasing power.

Editor’s note: Quorum is not affiliated with any of the companies mentioned in this article and derives no benefit from these businesses for placement in this article