The inflation rate may be starting to subside, but with prices still 6% higher than a year ago, it may still be having a big impact on your wallet. The typical American household spent $372 per month more in February than it did the year before on the same goods and services, according to Moody’s Analytics.
That can make it tough to stick to a budget — or to stay on track to meet other financial goals. In a recent report from PYMNTS in collaboration with LendingClub, nearly half (45%) of high-income consumers said they were living paycheck to paycheck.
The struggle may be even more difficult for those who have lower incomes and less breathing room in their budgets.
[Read: How to Make a Budget — and Stick to It.]
“Inflation is becoming a daily topic with clients,” Connor Spiro, senior financial consultant at John Hancock Advice, says. “It’s been in the news for a while now but it’s starting to really show its effects in the real world.”
Still, there are steps you can take to make ends meet during periods of high inflation. Here are some ideas to get started:
Never Go Shopping Without a List
Whether you’re hitting the grocery store or the mall, planning out your purchases ahead of time can prevent impulse purchases that can add to your bill.
Stephanie Genkin, founder of the website My Financial Planner, suggests a similar strategy for online shopping. Rather than making your purchases right away, she recommends adding them to a cart or wish list first, then looking at the purchase again a few days later.
“When you review the list from a distance, you don’t have the same stimulus response and you’re being more objective,” she says. “Most of the stuff, you don’t even want any more.”
[Read: Inside the Psychology of Overspending and How to Stop.]
Cancel Your Unused Subscriptions
A 2022 study by C+R Research found that average consumers estimated they spent just less than $90 per month on subscriptions — but in actuality, they spent more than 2.5 times that.
“Reviewing your recurring subscriptions is an easy way to cut costs in a budget,” Michael Tanney, senior managing director at Magnus Financial Group LLC, says. “Often these subscriptions have the ability to pause rather than cancel, so you can pause them for a few months and then reevaluate whether your miss it.”
Spend Less on Utilities
Energy costs have been among those hardest hit by inflation. Making small changes like sealing up drafty windows or switching to more efficient lightbulbs could make a big difference in your monthly bills. Turning your thermostat down by 7 to 10 degrees for eight hours a day (a smart thermostat can do this automatically) could save you up to 10% per year on heating and cooling costs, according to Energy.gov.
Lower Your Housing Costs
Making changes to larger budget line items could free up even more cash. Housing is the biggest monthly expense for many consumers, for example, so lowering that by downsizing, getting a roommate or renting out an extra room could free up a significant amount of cash.
“Making one big decision to save on housing or auto expenses means you may not have to make 10 or 15 smaller decisions and stress out about them,” Brian Leslie, financial planner with Edelman Financial Engines, says.
[READ: Should You Downsize to Save Money?]
Move Your Cash to a High-Yield Savings Account
One upside of inflation is that savings accounts are finally seeing higher interest rates than they have in the past decade. Many online banks are now offering 4% or more. If you’re not making close to that, it may be time to shop around to find a bank that can pay more.
[See: Best High-Yield Savings Accounts]
Make More Money
Another upside to an inflationary environment is that wages are also on the rise (though not as quickly as consumer prices).
“One characteristic of today’s economy is that there is a very tight labor market,” James Lee, financial planner in Saratoga Springs, New York.
“Individuals might be in a position to ask their employers for a raise, which can help with the income side of the budget, or look for work at another employer who might offer a higher salary,” he says.
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Tips to Make Ends Meet During High Inflation originally appeared on usnews.com
