Money Management Strategies During Inflationary Times – Forbes

Photo of a young man agonizing over how much it costs to fill his gas tank.

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The inflation reading from January 2021 – January 2022 was a whopping 7.5%. As a result, inflation worries are now a leading cause of financial anxiety for many households as purchases like groceries, gas, furniture and used cars have spiked in cost. Be that as it may, there are strategies that you can implement right now to lessen the stress and financial bite on your day-to-day finances. Here are some tips that can help you alleviate the cash flow crunch you might be experiencing during these inflationary times.

Household Expense Strategies

Ease the budget pinch on the goods you buy by seeking lower cost alternatives: Often times, generic brands carry the same or very similar ingredients and quality as brand-name counterparts. Be discerning about the value you are getting for the price of any product. You can find a great list of generic vs brand-name ideas here.

To help you get organized, use an expense worksheet like this to list your expenses or, if you are more of a technophile, MINT, YNAB and PocketGuard are good places to start. Then one by one, seek out an alternative, comparison shop or perhaps eliminate something you don’t need. You can use some of these examples to get you started.

Put subscriptions in check: Run a check on your subscriptions so that you can eliminate the ones you never or just occasionally use. Apps like Truebill, AskTrim, PocketGuard (also a budget app), and Mint (comprehensive budgeting app) are popular amongst subscription trackers. You can check out a list with reviews here.

Implement these 3 meal hacks:

1)     Cook 2-3 vegetarian meals per week. This can save you over $60 a month and can yield amazing health benefits.

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

We recently switched to making more boneless skinless chicken thighs versus breasts for the savings and for the flavor. If you are buying nonorganic, that’s a $3.72 vs ~$2.40 per lb. cost difference, with similar savings for organic as well. That can save you ~$50 bucks or more per month depending on how much you buy.

3)     Minimize food waste. The average American household of four wastes over $151 of food per month! Meal planning can go a long way, as well as freezing and/or properly storing food. Finding alternative uses for fruit and veggies that aren’t being eaten while still fresh and being mindful of true expiration dates can also help. Here are some more actionable ideas to reduce food waste and save!

Hold off on larger purchases that are being impacted by supply chain issues. Things like new cars and furniture have inflated in price. Wait for these to level out and keep an eye out for discounts as supply chain bottlenecks start to ease!

Financial Expense Strategies

Adjust debt repayments: If you are making larger than minimum payments, consider temporarily reducing these. If you are already there and need more help, consider reaching out to lenders to adjust minimum payments or to negotiate interest rates. This can give you some breathing room while you work on the other areas of your expenses to help address shortfalls and get back into a positive cashflow. Here are some tips to guide you there.

Reduce 401(k) contributions: If you’ve tried strategies to improve your cash flow and still find yourself 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 time to revisit the decision, possibly 6 months down the line. Keep in mind that taking this action can negatively impact your retirement planning goals. You can run a retirement estimate like this one to help determine the potential longer-term impact. 

Adjust withholdings: If you are typically receive a large tax refund, it would work to your advantage to reduce withholdings and receive more in your paycheck to address any cashflow crunch issues plus you aren’t giving the IRS a free loan on your money. Here is a W-4 form guide you might find helpful.

Increase deductibles on your insurance policies and comparison shop: Explore increasing the deductibles on your insurance policies like auto, homeowners, renters’ etc. Taking on extra financial risk via a higher deductible will turn into immediately lower premiums. Just make sure you have enough in savings to cover the higher deductible if something does happen. While you are at it, comparison shop to see if you can get even lower premiums from your current insurance company or get them to match lower offers and explore bundling insurance policies with the same provider to get steeper discounts!

Longer Term Inflation Resilience

Take meaningful action and invest in yourself and your career: Warrant Buffet has stated that your own career can be the best way to protect against rising prices. It’s not only about what you earn now but what you can earn in the future. Consider taking free or low cost online courses or working with a mentor to bump up your current skill set or learn a new skill set that is highly valued. I discussed how this can be the most profitable investment you can make here.

Putting It All Together

High inflation won’t last forever, but it can stick around long enough to cause stress that can impact our short- and long-term decisions. Use these tips to help alleviate any immediate financial stress and set you up for the future. If you are having trouble controlling your impulses or need someone to talk through how to prioritize and apply these tips to your situation, please reach out to a qualified financial planning professional or a financial coach through your employer’s financial wellness program for help!