6 Expenses on the Rise in 2022 and How You Can Save Money

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  • Due to the pandemic, inflation has reached 7.5%.
  • Cutting costs can help you offset the impact inflation has on your budget.

Inflation comes and goes. Knowing how to save money lasts forever.

As horrible as inflation may feel, it's a normal part of the economic cycle. Economists say the current inflation rate can be blamed on a surge in consumer demand and lack of supply due to the global pandemic.

To put our current situation in perspective, the inflation rate hovers around 7.5%. The year World War I ended, the inflation rate averaged 18%, and two years after World War II, it was nearly 11%. Due to several global issues, the period between the late 1960s and early 1980s is called "The Great Inflation."

Simply put, when Americans have money to buy things, but the "things" we want are not available or are in short supply, prices go up. At some point, either an increase in production or a decrease in demand will drive prices back down.

Granted, understanding how it works is not helpful as you stretch your monthly budget to pay more for everyday items. Here, we've compiled a list of things you can expect to cost more in 2022 and offer ways to save money.

1. Shelter

It's no secret home prices have hit new highs, forcing some out of the housing market. Typically, as mortgage rates creep up, one would expect housing prices to come down, but that's not the case this year. And that's primarily due to a lack of inventory.

What you can do: You have several options, including buying a "fixer," a house that fewer people are interested in. A rehab loan, like a 203(k), provides enough to pay for the house and upgrades. Or, you can wait until more homes are built, inventory grows, and prices begin to resemble something closer to "normal." The best part of waiting is that you'll have more time to save for the down payment.

2. Food

You can wait to buy a house, but not food. Staples, like eggs and milk, are becoming more expensive. Junk food like Coke, Pepsi, Ritz, and candies will also cost more this year.

What you can do: Limit junk food until prices stabilize. Rather than buy prepackaged food, purchase the raw ingredients to make your favorites. There are so many free, simple recipes online that it's hard to go wrong, even if you're not a worldclass cook.

If you've never been a coupon clipper, now may be a great time to begin. If nothing else, clipping coupons reminds you to look at weekly circulars and sales. Build your shopping list around what's on sale.

3. Gasoline

One of the current debates in Washington centers around whether companies are price gouging, using the pandemic as an excuse to fill their coffers (spoiler alert: some are).

According to the U.S. Energy Information Administration, the average price of gas increased by $1 between the beginning and end of 2021. Now that Americans are driving more, that supply and demand thing we touched on earlier comes into play.

What you can do: You may not be able to control the cost of gasoline, but you can reduce the amount of driving you do. For example, while carpooling has never been especially popular in the U.S., now may be the time to find someone to share a ride with to work. If public transportation is available where you live, consider joining the masses for a while. And if you do drive, apps like GasBuddy and Gas Guru can help you locate the cheapest gasoline in your area.

4. Clothes

For a while there, we were all living in our pajama bottoms and sweatpants (and it was glorious). Now that we're expected to dress like adults again, the demand for clothing is up. Unfortunately, so are prices.

What you can do: Before buying anything new, sell your old stuff through a consignment shop (brick-and-mortar or virtual). And instead of buying 15 new pieces of clothing, choose five or six well-made pieces that coordinate with each other so you can mix and match. If you stay away from faddish styles and stick with classics, you're likely to keep those pieces for years.

5. Vehicles

It comes as little surprise that the cost of buying a new vehicle is at an all-time high. COVID-19 did a real number on the supply chain, leading to a shortage of components. Unfortunately, the cost of used cars has also increased, jumping 40.5% between January 2021 and January 2022.

What you can do: If you have a car and can make it last a little longer, you might be money ahead by investing in what you're already driving – at least until the price of new cars becomes more competitive.

6. Heating costs

According to the U.S. Energy Information Administration, American households could see their heating bill rise by as much as 54% this winter.

What you can do: Change up how you keep your house warm. Here are a few ideas to get you started:

  • Take advantage of the sun's heat by opening curtains or shades on sunny days.
  • Close off unused rooms. There's no use heating space you won't be spending time in.
  • Turn the temperature down a bit more than you're accustomed to turning it down. Don't get so cold that you're uncomfortable (or unsafe), but go for a temperature you can handle while preserving energy. If you work away from home, make sure your thermostat is turned down to 63 or cooler when you're away.
  • If you enjoy baking, bake away. The heat from the oven will keep your kitchen warm for hours.
  • Get an energy audit to learn which areas of your house are losing the most heat. Check with your local gas company to learn if they conduct free or low-cost audits. If not, find out if they recommend anyone for the job. According to HomeAdvisor, the average energy audit averages around $400. If the auditor finds ways to help you save on energy costs, it could be money well spent.

Despite tales of gloom and doom, the inflation rate will come down. It did after both world wars, and it will after this global pandemic. In the meantime, now is an excellent time to practice clever ways to keep more money in your bank account.

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