Financial Education Blog

Three tips to battle inflation

Three tips to battle inflation

 

Text: Have you noticed prices rising at stores and the gas pump? That’s inflation, and in the wake of the pandemic, prices have climbed by roughly 6.8% over the last year.

 

Many people are starting to see some impact on their wallets, especially when it comes to gas and holiday shopping. While it may seem like there’s little consumers can do until the current rate of inflation returns to a healthy range, there are some small steps consumers can take to lessen the effect and potentially improve their financial situation.

 

Review and adjust your budget

The first things consumers should do when they realize prices are climbing is to review and adjust their budget. Take a look at your necessity categories – like food, rent, utilities, etc. – and add 5%. Once you’ve increased your necessity categories, lower the amounts of your other budget categories by the same amount. This will give your finances some wiggle room. While you’re at it, look for ways to cut spending – maybe it’s time to make your coffee at home – to help offset any strain.

 

Shop smart

One way to stop inflation is to shop strategically and look for ways to save. For example, buying company brand or generic groceries instead of name brand can reduce your grocery bill by 30%.

 

Also, don’t be afraid to buy items secondhand. Thrift stores like Goodwill have great deals on household items and clothing. Sites like Facebook Marketplace and Craigslist are also great options, especially for furniture or appliances.

 

Take advantage of low interest rates

If you’re considering a loan of any kind, you may want to make up your mind sooner rather than later. When inflation rises, it’s not uncommon for the Federal Reserve - the Federal Reserve monitors risks to the financial system and works to help ensure the system supports a healthy economy for U.S. households, communities and businesses – to raise interest rates to slow it down.

 

You may also want to take advantage of low fixed rates if you have any debt with a variable interest rate (think mortgage or credit card). Refinancing to a fixed-rate loan or taking out fixed-rate consolidation loan could save you a lot of money.