Right now, the United States and the entire world are experiencing high inflation. There are a lot of factors contributing to inflation, from the effects of the pandemic to the situation in Ukraine.
Regardless of the reasons for inflation, most people are looking for ways to save money and perhaps alter their budgets accordingly. Below is a guide for saving and managing money when inflation is high.
Gas prices are historically high currently. You might be thinking about anything from getting a scooter to commute if you live in an urban area to buying an electric car.
Recently, the average gas price in the United States went to over $4 a gallon, which was an all-time high. The prices are likely to stay elevated potentially all summer, or at least until there’s a point where the oil supply catches up with demand.
So what can you do?
- One of the best things to do when gas prices are high is make sure you’re shopping around. There are apps available like GasBuddy that will search nearby and find the lowest prices near you.
- You can also use less gas by combining errands and cutting out special trips for just one or two items.
- Using cruise control helps if you’re on the interstate, and keeping your tires inflated helps your gas mileage. Just make sure you’re not overinflating because it’s a myth that will help.
- Gas reward programs at individual gas stations or grocery stores can help, and people are increasingly relying on their warehouse memberships to help them save money too.
- Unless your car specifically needs premium gas, the regular unleaded option will probably be fine for your vehicle.
- Don’t fill up on the weekends if you can avoid it. Monday is usually the cheapest day to get gas, while Friday through Sunday are the most expensive days.
Make Lists Before Shopping
The cost of most staple food items are up and, in some cases, substantially.
In February of this year, the consumer price index rose at an annual rate of 7.9%. The last time inflation was like this was in the 80s.
One way to save money on things you need to buy for your household is to make a list before heading out. When you’re in the store, if you’re making emotionally driven or impulse purchases, you might be in for a shock when you get to the register.
Grocery lists aren’t the only thing we’re talking about here. You should also have lists for clothing and household products to be more strategic in your buying.
Food Shop Online
When you buy your groceries online, you can stick with your list more easily and be mindful of what you’re buying because you’re not going to impulse buy like you would in the store.
You can plan your meals and use the same ingredients for multiple meals. Just make sure that you’re not paying additional fees to order online. For example, do store pickup once you order your items rather than paying extra for delivery.
Speaking of planning meals, this is another important part of dealing with rising food costs and inflation. Have a plan for the entire week to make sure you’re buying only what you need.
When inflation is high as it is now, you may have to put more thought and work into your habits as a consumer.
We mentioned the importance of researching gas prices above, and this is something you should do for everything you buy.
Comparison shop, make sure there aren’t better prices, and ensure that you’re taking full advantage if there are any coupons or discount codes you can use.
For example, most grocery stores will advertise sales online, so you can plan your shopping trips based on these.
Prioritize Your Spending
You may have to shift your budget right now, including changing how you prioritize spending categories. Some of the extras you usually spend money on might not be worthwhile to you currently.
Look at your budget and see where you need to add more money and where you can take funds away.
For example, maybe you move money out of your budget’s eating out category and into your grocery category.
Get Takeout Instead Of Dining In
If you want to support local restaurants that have already endured so much during the pandemic, you’ll find that many of them are now having to increase their costs because labor and supplies are going up for them.
To deal with these price increases, maybe you get takeout but don’t dine in. You’re still supporting the restaurant, but you can save on extras like a bigger tip and drinks during your meal.
Be Strategic With Cashback Cards
Accruing debt during inflation isn’t a great idea, but if you use credit cards for the rewards and then pay them off, it’s a good time to look at your rewards programs.
You want to figure out which of your cashback cards you should be using. For example, you may start using the card that offers you higher rewards at the pump.
If you don’t have a card that gives you higher rewards for staple items, maybe you apply for one, as long as you’re able to pay it back each month.
Interest rates are going up and are likely to continue to do so, so be mindful of that with credit card usage.
Don’t forget about how you save and invest your money. Your strategies in this area might need to change to suit the current economic environment. For example, you need to make sure that you’re investing in your employer-sponsored retirement plan if it’s available so that inflation doesn’t erode the value of your money.
If you want to shift your investments around somewhat, you can also think about investing in businesses that can raise their prices without harming profitability.
Finally, avoid keeping a lot of cash-on-hand, beyond what you might need in your emergency fund during inflationary periods.