Whether you’re going to the grocery store or the gas station, it seems like everything is costing more. Unfortunately, it’s not your imagination, it’s reality. The question is, how do you manage your money when it takes more of it just to make ends meet?

Many of us may often hear terms in the news about the economy that we may not fully understand. Although it can be overwhelming, understanding the basics is fairly straightforward. One term you’ve probably heard many times throughout the course of this year is inflation. It can sound scary, especially if you don’t have a finance degree. According to Moody’s Analytics, “The typical American household now needs to spend $493 more per month to buy the same goods and services as it did last year.” That’s a pretty alarming statistic.

If you’re concerned about what is going on with inflation, interest rates, and the costs of everyday items, you are most certainly not alone. To cope and combat inflation means managing budgets, creating a spending plan, and keeping a close eye on what money is coming in and going out related to your personal finances.

Follow along for some great tips to help manage your debt and household expenses at a time when we are all paying even closer attention to every dollar we make and/or spend.

How is Inflation Impacting Household Budgets?

Inflation affects everyone, but it can touch people differently, especially depending on what’s going on in your particular area and household.

Many families across the country are facing rising gas prices and more money spent at the grocery store, as well as housing and rent costs that are higher now than they’ve been for decades. A good example is rent costs that are up as much as 17% compared to the same time last year.

Another way to offset the effects of inflation is to bring in more money to your household. Do you have a hobby that could generate additional income? Do you have a small business that could produce more income? Although it may be an uncomfortable conversation, you may want to consider asking your employer for a raise. There are a number of ways to generate more income for your household and reduce the burden of rising prices. Increasing the amount of money coming in can help pay bills and make ends meet.

We know what we read in the news, but is there anything we can do to make inflation’s impact a little easier to deal with? As much as possible, even during these challenging times, you want to have a plan and then stick to it. That means being a smarter shopper that avoids overspending, looking for deals where you can find them, being careful about credit spending, and creating a debt payoff plan. Things are challenging right now, but you can also consider a future after things return to some semblance of “normal.”

What Can I Do to Navigate Rising Prices?

From the time you were old enough to work, did you ever look at your paycheck and wonder where all your hard-earned money went? As inflation has hit a 40-year high, it’s even more important to figure out your finances to make sure you aren’t over-extended financially.

Some of the best ways to navigate rising prices is through budgeting, consolidating debt, and saving. All three can ease the burden of rising inflation. As prices of goods and services continue to go up and families search for solutions to meet their basic needs, all three can be a challenge but are no less important.

Your household budget can get away from you if you’re not careful. Those seemingly small monthly bills can add up and eventually have an impact on your overall budget. To stay on track with your household budget, look realistically at everything you spend on a monthly basis. While you should be mindful of costs and income, it doesn’t mean you have to go to extremes. Understand where you are right now and spend appropriately.

Take Inventory

As prices continue to fluctuate, it’s a great time to take a closer look at your budget. An item you may have purchased for your family may have been one price last month and cost even more the next.

Has your household income changed? Have you made adjustments for rising grocery store costs, transportation, or other expenses? A good place to start is to use a budgeting worksheet to track your monthly income against current expenses.

Along with tracking your income and expenses, you’ll also want to monitor your debt. To keep up with rising prices, you may find that you’re using your credit cards more often than normal. This can quickly become an issue if you’re not careful, especially if you aren’t able to keep up with payments or fall behind. Late or missed payments can affect your credit report, making it more challenging to get favorable interest rates, or make larger purchases. Having a debt payoff plan is essential to your financial success and sets you up for more savings, better credit, and can ease your mind if or when interest rates or inflation rise in the future.

Regular budget reviews give you a chance to consider what expenses are must-haves, wants, or items you could consider cutting out altogether. If things are tight, consider cutting out things you don’t need, like gym memberships and streaming subscription services. You can also contact service providers like cable or mobile phone providers to negotiate a lower rate.

It’s also smart to look for ways to reduce common household expenses like energy and even gasoline. You can work with your energy provider to put yourself on a consistent monthly payment plan. This will help reduce the surprise of increased bills during high usage months when temperatures are very high or unseasonably low. Energy savings can impact what you pay by as much as 5 – 10% per month on a residential bill, according to the Department of Energy.

Set a Simple Spending Plan

To get a better handle on where your hard-earned cash is going, especially during rising inflation, create a spending plan. This plan can be your roadmap to success now and into the future as the overall financial picture improves. Creating a spending plan helps you take control of your finances and puts a good habit in place for now and into the future. Plus, it can even help you reach your short- and long-term goals. Your spending plan should include all of your income and expenses. Ask yourself, “What money is coming in?”, “What’s going out?”, and “What are you saving?” And be sure to answer those questions honestly. In addition to your regular monthly costs, you should also include financial goals you hope to meet, like a family trip or larger expenses.

Managing budgets for your family takes planning and dedication, so it’s crucial to follow through on what you create. Your spending plan doesn’t have to be complicated, but it does have to include a realistic look at your finances.

Shop Smart

Sometimes it can seem like it’s a delicate balance to stay on top of your finances. Recent research shows 64% of consumers were living paycheck to paycheck at the beginning of 2022. With that in mind, it’s even more important to be smart about how you shop and spend your money.

Here are some tips on how you can be a smarter shopper in the face of inflation:

  • Create shopping lists and stick to them: Before making the trip to a store, make a list and decide to stick to it, no matter what tempting items are thrown at you. Impulse spending can be a challenge as you manage budgets for your family.

  • Look for bargains: Being patient and looking for deals can save you big money in the long run. Five dollars here or there may not seem like a lot, but those small savings can add up, and fast. The same way small impulse purchases can affect your budget negatively, savings from coupons and discounts can put money back into your pocket.

  • Buy essential household items in bulk: Utilize big box stores to stock up on common household items like deodorant, toilet paper, and some non-perishable food items.

Consider a Debt Management Plan

Monitor debt, especially as interest rates continue to rise. Paying off high-interest credit card debt can save money in interest, improve your credit score and credit report, and make more room in your budget for other expenses or for a debt payoff plan.

Your credit report doesn’t have to be a source of frustration. Learn why your credit history is important and how it affects your life. Your credit history is used to calculate your credit scores from the three major credit bureaus—Experian, Equifax, and TransUnion. Those three-digit numbers help lenders decide whether to approve you for new credit and what interest rates you may pay. Don’t forget to view your credit report at least once a year by visiting www.annualcreditreport.com.

Look at your particular financial situation and choose a debt payoff strategy that works for you. Our friends at GreenPath have a great Debt Management Plan that can help you pay off unsecured debt in three to five years. Their certified counselors can work with your creditors to bring your accounts current, lower interest rates, and eliminate fees.

Tap into Trusted Resources

Not only are all of us at GOLD here to help you live out your financial dreams, but our partners at GreenPath Financial Wellness have got your back, too. We partnered with them because they share in our vision of people helping people. Like GOLD, they, too, care about you, listen closely to your personal financial situation, and offer the best solutions to help you move forward.

By working with their certified financial counselors, you get caring and knowledgeable help to increase your credit scores, improve savings, reduce total debt, and gain the confidence you need to attain your goals.  
When you contact GreenPath, you’ll receive a free initial financial counseling session with certified counselors who lend an emphatic ear, look at your entire financial picture, help you ease financial stress and uncertainty through access to clear resources, and assist you in developing a personalized plan.

Learn more about GreenPath and how they can help today. 

GreenPath Financial Wellness

GreenPath Financial Wellness

Our partner, GreenPath Financial Wellness, provided this blog content. GreenPath is a national non-profit organization whose mission is to empower people to take charge of their financial futures. As a Member of GOLD, you have access to GreenPath’s educational tools and resources that are geared to help you along your journey of reaching financial success. 

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