Budgeting During Inflation

Bloomberg economists have estimated that the average household in the U.S. will be spending upwards of $433 more per month in 2022 than they did last year. This is a minimum of $5,200 per year if you make no changes to your style of living. If your budget has little room for additional expenses, you will need to make some difficult decisions about your budget.

First and foremost, rethink you housing needs, even though home rentals are at approximate 40% premium and home ownership looks attractive many people neglect to think of the additional costs and responsibilities of home ownership. If you already own your home make sure you are factoring in repairs, renovations, taxes and insurance into your budget preparation.

Make a list before going shopping. This will help you to cut down on impulse buying. This one simple act helps you to remove emotion-driven purchases. In addition to this concept, consider buying groceries online. This forces you to do some meal planning so you are only buying what is necessary to make specific meals. Next to housing and transportation, food is the largest household expense category. Online grocery purchase will help you eliminate impulse buys as well as browsing shopping. This tactic also helps you keep your grocery spending in check as you can see your running total.

Online retailers like Amazon are focused on one goal – making it as easy as possible for you to shop. Some suggestions to combat that is to remove retailer apps that make one click buying an option. Additionally, introduce a little self-restraint and willpower and limit your “online shopping days” to once a week rather than taking part in the instantaneous shopping. If you load things into your cart, institute a rule that you have a ‘waiting period’ before you finalize a purchase. This waiting period can help cooler calculated head prevail.

Lastly, review your subscription services. When money flows more freely we are more apt to join memberships or subscriptions that seem cheap. There's your music subscription, video streaming subscriptions, gym membership, online storage, cell phone service, and probably much more. Companies make it simple to sign up for their services, and it's often easy to let them continue long after you don't need them because either you've forgotten about the subscription or it's difficult to unsubscribe. There are several apps you can use to help you identify unused or overpriced subscriptions however, you can accomplish this on your own by analyzing your bank and credit card statements.

In addition to basic living expenses Americans can expect to pay upwards of $2,000 more in gas this year. There are a few decisions you can make that will help keep costs low. Here are four of my favorites:

Check out apps like Waze and GasBuddy. If you’re not a Waze user, you should be. Not only does it help you get from point A to point B quickly and safely, but it can also locate the cheapest fuel nearby. One unique feature with GasBuddy? You can search for gas based on fuel type.

Look into joining a warehouse store: Places like Sam’s Club, Costco, and BJ’s offer discounts on fuel. The average discount is around $0.10 less per gallon than other gas stations. With a basic membership running around $50 per year, joining for the gas savings alone might make sense. The only hiccup? The stations are only found at warehouse locations.

Time your fill-ups. Experts also say the best days to fill up are Mondays and Tuesdays. That’s when gas is cheapest during the week. Also, consider “stacking” your daily outings, so you don’t backtrack all over town and use more fuel than you need to. Another idea? Carpool whenever you can or take public transit.

IF YOU DO NOT LIVE IN CALIFORNIA - Consider E15 gasoline: On April 12, President Biden announced an emergency waiver allowing year-round sales of E15 gasoline, which contains a 15% ethanol blend. Its sale is typically prohibited from June to mid-September because of air quality concerns. According to the White House, E15 can save consumers around 10 cents per gallon on average, so the next time you’re at the pump, look for E15 and save.

The Consumer Holds (Some) Cards

As inflation began, consumers were willing to foot the bill to continue their same buying habits and lifestyle choices. Lately, though, there has been more general chatter of folks saying enough is enough, changing their lifestyles, and making more informed purchasing decisions.

When enough consumers have this same collective mentality, inflation could be reaching or nearing a peak–simple supply and demand. It’s possible that the eventual effect is a demand slowdown until pricing from the top levels begins to decrease.

Ultimately, though, many consumers weren’t living large before inflation took hold, and it’s not realistic to cut back on a lifestyle of buying basic necessities. For people in this boat, it may be more of a waiting game–and one that’s hopefully nearing its end.