- As the cost of essentials continues to rise, a budget will help you keep ahead of inflation.
- Apps and planning can help you reduce the cost of food and gas.
- Don't take on debt to cover extra costs, no matter how tempting it is.
These budget hacks can help you beat inflation.
There's no way around it, life is getting more expensive and it doesn't look like prices will go down anytime soon. Plus, salary increases aren't keeping pace with inflation. As a consumer, that means it's time to look for ways to decrease your monthly bills or increase your income. The key is to ensure you aren't spending more than you bring in and still have cash to put toward your future.
Here are four achievable steps you can take to handle spiraling living costs:
1. Make a budget
I've talked to a lot of people who are worried about increasing prices recently. Unfortunately, when I asked how much they made and spent each month, they didn't know the answer. The idea of making a budget can feel overwhelming or simply keep falling to the bottom of your to-do list -- we're all human. But knowing what you spend is crucial if you're to cope with soaring costs.
Your budget doesn't have to be a huge spreadsheet with hundreds of entries. What matters is to work out what your monthly outgoings are, whether you use a budgeting app or a pen and paper to do it. The easier you can make it on yourself, the more likely you'll be to continue to manage your budget going forward. Once you know how much you spend versus how much you earn, you can start to identify areas where you might be able to save money.
2. Look for ways to cut your food costs
The average cost of groceries increased by over 12% from June 2021 to June 2022, according to the Department of Agriculture. If your monthly grocery bill was $400 a year ago, the same shopping cart could set you back almost $450 today. Cutting food costs doesn't mean you have to live on rice and beans for the foreseeable future. The trick is to find ways to reduce your spending without feeling miserable.
One big potential area where you could save on groceries is to cut food waste. An estimated 30% or more of our food gets thrown away, and wasting less food can benefit you in two ways:
- You can save money by reducing how much food you put in the garbage. Freeze leftovers so you can heat them up another day. Try to make a meal plan before you go shopping so you only buy what you need. If you're not a fan of meal plans, make sure you have plenty of staples in the cupboard so you don't have to make any last-minute dashes to the store.
- You can pick up some food bargains. A number of restaurants and grocery stores are keen to sell food before it goes to waste. Install apps like Too Good To Go or FoodForAll to connect with participating outlets.
It's also worth looking for ways to maximize rewards on the spending you do. If grocery shopping makes up a large proportion of your monthly spend, check out credit cards with high rewards on grocery spending. As long as you pay off the balance at the end of the month, this can be a good way to offset the cost of living increases. Also see whether cash back apps such as Ibotta would pay you extra rewards on grocery shopping.
3. Try to cut your gas costs
In March, a gallon of gas cost more than double what it did in January 2021. Gas accounts for between 2.7% and 5% of Americans' budgets, which makes it another area where cost cutting can help your bank balance. Reducing the amount you drive can be easier said than done, especially if you have to get to work or get the kids to school. However, even consciously grouping errands together so you make one trip instead of three could lower your mileage a little.
Just as there are apps that can help you reduce food costs, technology is also your friend when it comes to gas. Use apps like GasBuddy and AAA to find the lowest pumps nearby. And if you're a Costco member, many Costco gas stations also sell lower cost fuel. You might also be able to earn cash back with a gas rewards credit card.
Other ways to save money at the pump include checking your tire pressure and reducing the amount of extra weight in your trunk. There's also a fuel efficient option on Google Maps, which means you can take the most efficient route. You might also cut gas costs with things like car pooling, public transport, or online shopping.
4. Try not to take on debt
As the cost of essentials increases, it can be tempting to use your credit card to cover extra costs. The trouble is that if you can't pay off your bill at the end of the month, you'll have to pay high interest rates on that debt. If you already have credit card debt, look for ways to pay it down. Increasing interest rates mean you'll pay more to borrow money.
Now that we've survived the woes of the pandemic, it's tempting to splash out and celebrate, whether that's buying new clothes or taking a long-overdue vacation. However, now more than ever, don't borrow money for non-essential spending. The pandemic may be over, but we're entering a period of economic uncertainty and things could get worse before they get better.
I often bury my head in the sand when there's a problem and hope it will go away. Sometimes it works, but often that only makes the problem worse. If you're worried about the increasing cost of living, don't ignore the problem. See if you can implement a few budget hacks and keep ahead of inflation. That way you can avoid allowing your spending to creep upwards and get out of control.
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