Inflation Is Hitting Americans' Wallets. Here Are Some Key Steps to Take
The cost of goods is rising. Here's how to fight back.
Are you in the market for a car? If so, prepare for sticker shock. The cost of vehicles has risen exponentially, making an already costly purchase even more expensive.
But a car isn't the only thing you might pay more for these days. Walk the grocery store aisles. You'll probably find that many of the items you normally purchase cost more than you're used to.
And then there's gasoline. Fuel costs commonly rise in the weeks leading up to summer, but this year, prices are already out of hand.
In fact, the cost of consumer goods rose 5% in May compared to a year prior, and a big part of the reason boils down to high demand and low supply.
During the pandemic, production was halted or slowed across a range of industries as the economic crisis hit hard and consumer demand began to wane. Last year, factories furloughed workers, both for financial and safety reasons, and numerous supply chains experienced their share of interruptions.
But for the past several months, the economy has been looking better. Weekly jobless claims have been on a steady decline. More people are getting back to work. And the $1,400 stimulus checks that began hitting Americans' bank accounts in March are being put to good use.
All of this has caused an uptick in demand, to the point where it's currently outpacing supply and driving the cost of consumer goods upward. And things may, unfortunately, stay this way for a while. If you're worried about the impact on your wallet, here are some essential steps to take.
1. Rework your budget
The expenses mapped out in your household budget may not accurately reflect the cost of living at present. Take a look at your budget and adjust those spending categories that are going up. Then, figure out where you'll cut back to compensate for the rising costs of essential purchases, like food or fuel for your vehicle.
For example, you might have $100 a month allocated for gasoline when these days, it's costing you $115. You may decide to cancel a streaming service temporarily to make up that $15.
2. Do your research
It may cost more money than usual to fill up your tank or replenish your fridge, but that doesn't mean you can't comparison shop in an effort to trim your costs. You can use sites like GasBuddy to research fuel costs in your area so that when your car needs a fill-up, you can spend a little less. Similarly, look through those supermarket circulars and pay attention to weekly sales.
3. Make sure you're using the right credit cards
Unfortunately, you may, for the time being, be stuck paying more money for basic goods like groceries. But that doesn't mean you can't score some extra cash back in the process -- cash that could help offset your rising expenses. Take a look at your credit cards and make sure the rewards they offer align well with your spending. It could make sense, for example, to get a new card that offers more cash back than you're currently getting on gas and groceries.
The tricky thing about rising consumer costs is that they have the potential to sneak up on you. You may not feel the pain so much if you spend an extra $2 at the pump one day or an extra $7 at the supermarket on a single occasion, but in time, that extra spending can add up to the point where it could cause you to have to rack up some debt.
It pays to do whatever you can to avoid that scenario. And if you rethink your budget, take steps to snag discounts, and maximize credit card rewards, you can help yourself get through this rocky period with your finances intact.
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