Money Management Strategies in Times of Inflation

The inflation reading from January 2021 to January 2022 was 7.5%. As a result, inflation worries are now a leading cause of financial anxiety for many households, as purchases such as groceries, gas, furniture and used cars have increased in arrow. Either way, there are strategies you can implement right now to reduce the stress and financial bite on your day-to-day finances. Here are some tips that can help ease the cash flow crunch you may experience in these times of inflation.

Household spending strategies

Reduce budget pressure on the goods you buy by looking for lower cost alternatives: Often, generic brands offer the same or very similar ingredients and quality as their brand name counterparts. Be choosy about the value you get for the price of any product. You can find a great list of generic or branded ideas here.

To help you get organized, use a worksheet like this to list your expenses, or if you’re more tech-savvy, MINT, YNAB, and PocketGuard are good places to start. Then, one by one, search for an alternative, a comparison store, or maybe eliminate something you don’t need. You can use some of these examples to get you started.

Control subscriptions: Check your subscriptions so you can weed out the ones you never use or only use occasionally. Apps like Truebill, AskTrim, PocketGuard (also a budget app) and Mint (comprehensive budgeting app) are popular among subscription trackers. You can check out a list with reviews here.

Implement these 3 meal tips:

1) Cook 2-3 vegetarian meals per week. It can save you over $60 a month and can have incredible health benefits.

2) Consider buying less expensive cuts of meat. They can provide great quality and often better flavor! There’s very little a slow cooker or multicooker can’t do!

We recently switched to making boneless, skinless chicken thighs instead of breasts for cost savings and flavor. If you’re buying non-organic, that’s a cost difference of $3.72 versus about $2.40 per pound, with similar savings for organic as well. This can save you around $50 or more per month depending on how much you buy.

3) Minimize food waste. The average American household of four wastes more than $151 worth of food per month! Meal planning can go a long way, as well as freezing and/or storing food properly. Finding alternative uses for fruits and vegetables that aren’t eaten while still fresh, and considering actual expiration dates can also help. Here are some more concrete ideas to reduce food waste and save money!

Wait on big purchases who are affected by supply chain issues. Things like new cars and furniture have ballooned in price. Wait for these to stabilize and keep an eye out for discounts as supply chain bottlenecks start to ease!

Financial spending strategies

Adjust debt repayments: If you make payments above the minimum, consider reducing them temporarily. If you’re already there and need more help, consider contacting lenders to adjust minimum payments or negotiate interest rates. This can give you some breathing room while you work on the other areas of your spending to help you fill in the gaps and get back to positive cash flow. Here are some tips to guide you.

Reduce 401(k) contributions: If you’ve tried strategies to improve your cash flow and are still struggling to make ends meet, consider temporarily reducing your 401(k) contributions to just enough to get the full match. Try setting a reminder in your calendar for a while to review the decision, possibly 6 months later. Keep in mind that taking this step may negatively impact your retirement planning goals. You can run a retirement estimate like this to help you determine the potential longer-term impact.

Adjust deductions: If you typically receive a large tax refund, it would be to your advantage to reduce withholdings and receive more from your paycheck to solve any cash shortage issues and you are not giving the IRS a free loan on your money. Here is a guide to Form W-4 that you might find useful.

Increase the deductibles on your insurance policies and comparator: Consider increasing the deductibles on your insurance policies like auto, homeowners, renters, etc. Taking on additional financial risk via a higher deductible will result in immediately lower premiums. Just make sure you have enough savings to cover the higher deductible should anything happen. While you’re at it, compare prices to see if you can get even lower premiums from your current insurance company or match them to lower offers and explore. bundle insurance policies with the same provider to get bigger discounts!

Longer-term inflation resilience

Take meaningful action and invest in yourself and your career: Warrant Buffet said your own career may be the best way to protect yourself against rising prices. It’s not just about what you earn now, but also what you can earn in the future. Consider taking free or low-cost online courses or working with a mentor to improve your current skills or learn valuable new skills. I explained how it can be the most profitable investment you can make here.

put it all together

High inflation won’t last forever, but it can linger long enough to cause stress that can impact our short- and long-term decisions. Use these tips to help ease any immediate financial stress and prepare for the future. If you have trouble controlling your impulses or need someone to walk you through how to prioritize and apply these tips to your situation, please contact a qualified financial planning professional or financial coach through the financial well-being from your employer for help!

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