The United States has been grappling with inflation, and as of January 2023, the annual inflation rate remains at a concerning 6.5%.
While this is lower than the alarming peak of 9.1% in June 2022, it’s still enough to make you notice that nearly everything you regularly purchase has become more expensive.
According to the ‘2022 Personal Finance Snapshot Survey’ by FNBO, 67% of Americans report that inflation has made it increasingly challenging to afford necessities.
The reasons are evident. The U.S. Bureau of Labor Statistics reveals that compared to a year ago, food costs have soared by 10.1%, energy costs by 8.7%, rent by 8.6%, apparel by 3.1%, and medical care costs have risen by 3%.
Your salary has yet to keep pace with inflation, so your budget might struggle.
While we can’t predict when or if these prices will start to decrease, there are steps you can take to ensure you don’t spend more than what’s in your bank account.
Steps to Financial Resilience Amidst Inflation
1. Eliminate Unnecessary Expenses:
Look closely at your weekly and monthly expenses. Can you identify any areas where you can cut back or eliminate? Consider canceling monthly subscriptions, like video/music streaming services, unused gym memberships, or beauty boxes. Take on tasks yourself, such as cleaning your home or maintaining your yard, rather than outsourcing them.
2. Shop for Groceries Wisely:
Adjusting your grocery shopping habits can make a substantial difference. Opt for store or generic products instead of pricier name brands – this simple switch can save you 20-25% without sacrificing quality. Moreover, consider frozen fruits, vegetables, and meats as alternatives to fresh ones; they’re just as healthy and cost up to 50% less.
3. Reduce Your Home’s Energy Bill:
Small changes in your energy consumption can lead to significant savings. Seal drafty doors and windows, adjust your thermostat a few degrees in the appropriate season, switch to energy-efficient light bulbs, invest in energy-efficient appliances, and fix leaky faucets and ductwork to reduce energy wastage.
4. Optimize Fuel Efficiency:
With gas prices fluctuating, optimizing your vehicle’s fuel efficiency can help you save a substantial amount. Plan your trips and errands efficiently to reduce unnecessary driving. Consolidate grocery shopping into one trip rather than daily visits. Consider driving a bit slower, as reducing your speed by 5 to 10 miles per hour can improve fuel economy by as much as 14%.
5. Tackle Debt:
Paying down existing debt should be a priority. While making at least minimum payments is crucial, paying more can help you clear your debt faster. Avoid accumulating more debt by paying with cash whenever possible.
Inflation can strain your finances, but by implementing these strategies, you can better navigate these challenging economic times.
Reducing unnecessary expenses, optimizing grocery shopping, cutting energy costs, and managing debt will help you maintain financial stability, even when prices rise. Remember, small changes can make a big difference in your economic well-being.