Millions of people continue to feel the impact of rising prices due to surging inflation. By June of this year, inflation rates rose to 8.1 percent in Canada, and 9.1 percent in the U.S. With no end yet in sight, experts are hoping for at least a deceleration in rising prices. From the gas station to the grocery store, your budget is feeling the squeeze, but there are strategies you can use to get through these tough times.
What is Inflation and What Causes It?
Inflation is the increase in the price of goods and services over a period of time. When demand for consumer goods is high and supplies are low, prices rise. The cause behind the current surge is a hotly debated topic, but certainly part of the issue has been the economic and supply chain impact of the Covid pandemic. When the pandemic began in 2020, many people lost their jobs or experienced a significant decrease in opportunities to work. People started being very cautious about their spending habits. Now, thanks to an improved job market and stimulus programs that put money into people’s hands, demand for products have significantly increased. But many manufacturers and shipping companies are still short of staff, which makes keeping up with demand a real challenge. High demand and low supply means higher prices.
No one can say for sure how long this situation will last. Some financial experts believe the surge will slow as 2023 approaches, others have more dire predictions. Regardless of how long it sticks around, it’s important to maintain perspective. Such things have happened before, and we know things will eventually improve. Until then, here are five tips to help you beat inflation:
- Review your budget.
The first step is to sit down with your monthly budget and determine how much money you have coming in, and exactly where it’s going. Identify any areas where you can reduce spending. If you hire someone to cut your lawn, cut it yourself and stash that cash into an emergency fund. Stop dining out for now, or cancel streaming services. You can always start them up again when things improve. The goal is to live within your means by adjusting your spending and saving habits as needed.
- Reduce Your Home’s Energy Bill
The cost of heating or cooling your home, and keeping the lights on, can really add up. The average family spends more than $1,400 a year on utilities alone, so what might seem like small tweaks could reduce your energy consumption and take some pressure off your finances. Check seals on windows and doors, use cold water for laundry, take shorter showers, repair leaky faucets, turn your thermostat up a few degrees in the summer and down a few degrees in the winter. Don’t underestimate how effective these simple steps can be.
- Change How You Shop For Food
One of the largest monthly expenses for families is food. As of 2022, an average Canadian family of four will spend over $1,200 a month for food. That’s more than $14,700 a year! In the U.S. those numbers are about $1,300 a month and $15,000 a year. Since reducing how much food you buy may not be wise, or feasible, you can make some changes in the way you shop that can save you a lot of money over a year’s time. For instance, if you only purchase name brand products, try opting for generic versions or store brands of the same product. Many of these are manufactured in name brand facilities and offer the same quality. Doing so could save you 20-25% on each product. Rather than purchasing fresh fruits and vegetables, try frozen. They’re just as healthy, last longer, and may save you as much as 50%.
- Buy Less Gasoline
Depending on your vehicle and where you live, a full tank of gas might cost you $75 to $100 or more. Since fuel costs have risen, but you still need to get to work, school, grocery, and so on, making each tank last as long as possible is important. Plan your trips and errands as efficiently as you can. Instead of going to the grocery multiple times a week, plan your meals, make a list, and make one trip. If you have several errands to run, plan your route so that you drive shorter distances. Simply reducing your speed by 5-10 mph can improve your fuel economy by as much as 14% according to the U.S. Department of Energy. Also, when you’re waiting in the school pick-up line, shut off your engine. An idling vehicle can burn as much as a half gallon of gas in just 60 minutes.
- Increase Your Income
The current job market is on fire, so you have options. You can start by asking for a raise. If that doesn’t go well, you might consider a new job. Changing jobs can be scary, but a recent ZipRecruiter survey showed that the average salary increase when switching jobs was 11% or higher. That’s nothing to sneeze at, and is definitely worth investigating. You could also create a profitable side hustle. Good at WordPress? You could build websites as a freelancer. Are you a decent writer? You could offer your services on a freelancing site. You could also sell unused items you have sitting in the garage or storage unit. Be sure to maintain the same lifestyle as you grow your income. People often increase they’re spending when they start making more money, and that won’t help you get the upper hand on inflation.
These tips are a great way to protect yourself from the negative effects of current and future inflation trends. I’d also encourage you to build an emergency fund for those unexpected expenses, and if you’re an investor, keep investing! Stay wise in your daily actions, but keep the perspective that financial health is a long-term game. Small changes in the moment will reap huge rewards in the future.
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