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According to the US Bureau of Labor Statistics, as of March 2024 the rate of inflation sits at 3.5%, up from 3.2% just a month earlier. From insurance rates to grocery bills, the cost of everyday necessities seems to be continuously climbing uphill with no end in sight. If you find yourself not only struggling to save money, but struggling to afford even your basic expenses in the face of these price increases, you are not alone.
The good news is that even though inflation is out of your control, there are several options available to you if you are looking to cut back on costs and stay one step ahead of your finances. There are 5 key areas to focus on here: budget, debt, cost comparison, grocery and gas expenses, and savings.
1: Budgeting
Determining and sticking to a budget is one of the best ways that you can stay on top of your personal finances. Thankfully, you are not alone on your budgeting journey. There are several tools designed to help you nail down your budget and stay on track so that you never have to worry about overspending.
For example, Goodbudget is a great place to start creating your budget by utilizing the envelope method. This basically means that the app allows you to create spending categories so you can allocate certain portions of your money to certain expenses. Apps like Goodbudget can help you visualize all of your expenses and spending habits in one place so that you can easily see where you can cut back on spending and increase your savings.
2: Cut back on grocery and gas bills
You’re probably thinking that this is more easily said than done. There’s only so much you can do to control the amount you’re spending on groceries and transportation when (obviously) you need to eat, and you need to get from point A to point B. However, there are still methods for cutting back on these costs.
First, unless you live in a particularly rural area, you most likely have multiple grocery stores within driving distance of your home. One of the best ways to cut back on grocery costs is to compare the prices at different options in your area. For example, a grocery store like Aldi will likely have cheaper prices than a Whole Foods.
When it comes to transportation, using public transit if it is available to you is one of the best ways to get around without breaking the bank. If you aren’t driving as much, the rising gas prices will not be weighing as heavily on your wallet.
It’s worth mentioning though that this is not an option for everybody. If you are located in an area where public transit is not accessible, the next best way to save is by carpooling. Split your driving to locations like work or school with a friend or a coworker and you will be able to cut your gas bill significantly.
3: Watch your credit card debt
Nearly half of all credit card holders in the U.S. have some level of credit card debt. This isn’t surprising when prices for necessary items keep rising and consumers find themselves backed into a corner where using a credit card is the only option. This becomes an even bigger issue when considering the impact inflation has on your APR.
Your APR (or annual percentage rate) is basically the rate of interest applied to your credit card debt. Depending on what kind of credit card you have, inflation may impact how high your interest rate is and could lead to you owing much more on your payments than you initially spent. This is why paying off debt as quickly and painlessly as possible is key in times of high inflation.
4: Compare insurance prices
Oftentimes insurance prices lag behind the rate of inflation. This is because insurance providers aren’t aware of the way inflation will impact claim payouts until those payouts actually happen.
Because of this, car insurance has gone up exponentially in the last year alone, with no sign of a price decrease any time soon. This is why it is more important than ever to check your insurance premium and compare it against other providers in your area to be sure you’re getting the best deal.
By comparing rates from multiple insurance companies at once, you gain the ability to evaluate what you’re currently paying and find opportunities for savings at different providers.
Car insurance is constantly changing, and every provider sets rates differently, so comparison shopping once every few months may end up saving you big time in the long run.
5: Set up automatic transfers
Even as you’re trying to reduce spending, saving is still important. Having a safety net in place in case of unforeseen circumstances such as a job loss or medical expenses will help to offer you peace of mind and may end up saving you from debt down the road.
Setting up automatic transfers with your bank is a passive way to help you build your savings, even in times of high inflation. By allocating a certain portion of your paycheck to automatically be deposited into your savings account, you are taking the temptation to spend that money away.
When that chunk of your income was never really in your checking account to begin with, it is easier to compartmentalize it as money intended for savings rather than money intended for spending.
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