After more than two years of struggling through a global pandemic, U.S. consumers are now battling with surging inflation rates not seen in forty years. The average American household is spending as much as $460 per month more for the same items as last year according to a Moody’s Analytics analysis.
High inflation can be a major cause of financial tension for many consumers. In addition to driving up the cost of products, inflation makes it difficult to decide how to personally spend, save or invest. Here are a few ways to survive inflation and manage soaring costs.
Budgeting and Cutting Expenses
Implementing a realistic foundation of your financial position is the best way to prepare against rising inflation costs. Forming a strict budget of all income and expenses will help determine necessary lifestyle changes. Begin by organizing and tracking your finances by logging into your online bank account and examining your spending. Our free, online calculators can also help you solve common financial questions.
Cutting expenses include joining grocery loyalty programs, shopping for discounts, switching to store brands, canceling unused subscriptions, eliminating unnecessary driving or searching for better rates on home and auto plans.
Put off Big Purchases
Waiting to purchase large ticket items such as cars, homes or major appliances until inflations rates decline, will avoid adding to your debt burden.
Paying Down and Avoiding New Debt
Achieve your goal of paying down debt by using a zero-interest balance-transfer card, a debt-consolidation loan (utilizing a lower rate than a credit card) or consulting a nonprofit credit agency for no-obligation financial advice. If possible, waiting to borrow may be the best option.
Invest for the Future
Saving strategies to keep you afloat include continuing to make regular contributions into your company’s 401(k) and diversifying your investment portfolio among stocks, bonds and real estate. If you have access to cash beyond your emergency fund, consider a government bond that rises or falls with inflation/deflation, based on the consumer price index.