When your monthly household expenses take a bigger bite from your wallet, how do you stretch your budget? According to a Moody’s Analytics report, inflation is costing an additional $296 a month in household expenses.
How to Stretch Your Budget When Inflation Hits
According to the US Bureau of Labor Statistics data, the February inflation rate is 7.9%. This means that prices of goods and services are 7.9% higher compared to a year ago.
This is also the highest inflation rate recorded since 1982. Ryan Sweet, the Moody’s senior economist who crunched the numbers, says the worst is yet to come. “It is going to get worse before it gets better.”
According to an analysis by the Penn Wharton Budget Model, some households will feel more pain compared to others.
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Low and middle income households will spend 7% more in 2021 for the same items compared to 2020 or 2019. In contrast, high income households will only increase their spending by 6%.
Middle Class To Receive the Biggest Blows
Meanwhile, another study conducted by Wells Fargo concluded that the American middle class will receive the biggest blows from inflation.
The middle class will deal with a half a point higher inflation rates compared to higher and lower classes. Broken down to race and ethnicity, Hispanics and Latinos face the biggest jumps in living costs.
Sahirenys Pierce, the founder of the personal finance blog Poised Finance Lifestyle, thinks that inflation changed Americans. “The fear of inflation, the pandemic and war are challenging what future generations consider to be the American Dream.”
Stretch Your Budget Tip 1: Plan Ahead
Plan ahead on purchases to save on fuel. Gas is especially expensive right now, and making frequent and repetitive trips to the store won’t help you save money.
In addition, Misty Lynch financial planner for Sound View, says to time your trips. Choose a time when traffic is light to save even more on fuel.
In addition, prepare a meal plan and bring it when grocery shopping.“It does help people save money if they know what they are going to eat and stick with it,” Lynch added. Many free or minimal apps exist to help manage meals as well as budgets.
Stretch Your Budget Tip 2: Shop Wisely
A discount grocery store helps especially if you don’t need to purchase specific brand items. Bulk purchases in warehouse stores like Costco can stretch your budget a little more.
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When comparing the price of products, don’t just look at the price tag. Compare prices by computing the cost per unit. This way, you can tell if a seemingly-higher priced item can actually save you more by offering more in quantity.
In addition, don’t disregard the savings provided by coupons. Rewards programs for specific cards or products can also help.
Also, check browser extensions like Rakuten and Honey. These automatically look for coupon codes you can use for discounts when ordering online.
Stretch Your Budget Tip 3: Check Your Wallet
Prices are continually rising, so it’s a good idea to look at your budget every now and then to assess. Pierce suggests reviewing your budget every week.
“You want to be aware of where all of your money is going,” he said. This gives you “the opportunity to lower another area of your budget to make the numbers work,” she said.
When doing so, cut off items that you realize you don’t need. Also, try to reassess if you can lower your cable TV, internet, or phone plans as well as your car insurance.
If you need to stretch your budget further, make an inventory of your electricity consumption. Reduce or eliminate any unnecessary use of power by unplugging appliances or storing them when not needed. All in, this can save 5 to 10% of your consumption.
Watch the 12 News video providing helpful tips on saving money: How to stretch your budget at the grocery store:
Are you feeling the crunch of inflation on your household expenses? Do you have a tip to share on how to lower expenses?
Share your ideas here with your fellow readers. Leave your thoughts in the comments section.
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