Seven Tips to Adjust your Budget for Inflation

Today, inflation is the highest it has been in over four decades at 8.5% (2% is a healthy inflation rate) and Mainers budgets are feeling the strain. With prices on the rise for food, gas, housing and many other products and services we rely on every day, households are spending over $325 more each month just to keep up with their standard of living, according to Moody Analytics.

While experts expect inflation to moderate in the months ahead, there are things you can do now to manage your personal economy and deal with this financial pressure. Here are seven ways to help reduce the impact of inflation on your budget.

Examine Your Spending

Review your budget and spending frequently to keep track of where your money is going. Determine where your spending has increased. Groceries? Gas at the pump? Take out? You may need to reduce or eliminate some expenses in your budget to make the numbers work. Consider cutting out things you don’t need or are not using. Grocery delivery or streaming services may have been important during Covid, but may be something you can live without now. Delay or skip some services or extras. Push out dog grooming or haircuts for the humans a few weeks. Skip the spa and do a DIY manicure or facial instead. Pass on the takeout and try some new recipes at home. Get creative.

Plan Ahead

Some planning can go a long way to reduce unnecessary expenses. Before heading to the grocery store, know how much you want to spend for the week. Be armed with a meal plan and shopping list that considers what is already in the cupboard and refrigerator and incorporating items on sale for the week. To save on gas, be strategic about the use of your car. If you have to run errands, do them in one trip and at a time when there is not a lot of traffic. Consider carpooling to work or taking turns with other parents to take the kids to practice or other activities. Consider trading in your car for public transportation, when possible. Shop around for the best prices for gas in your area. For bigger ticket items, watch for sales. If you need a new appliance for your home, holiday weekends and the fall are often times you will find great sales.

Shop Smarter

Examining your shopping habits, being intentional about your spending and taking the time to plan your shopping needs may take some work but is sure to help save some money. For groceries, you don’t have to stay loyal to where you have always shopped just because you have always shopped there. Do some comparison shopping to find the cheapest grocery store in your area. Consider joining a warehouse club store and buying in bulk to save. Sign up for retailer’s frequent shopper programs to receive electronic coupon offers. When shopping online, browse extensions like Rakuten that automatically search for coupon codes and apply them at checkout when shopping online.

Look for Ways to Save

Get frugal and look for savings in your budget. Stocking up on sale items at the grocery store and choosing generic brands rather than name brands can help stretch your food dollar. Instead of buying books, take advantage of your local library. If you are planning a summer vacation, consider a staycation and explore some of the many sites of Maine with day trips. If you are looking to make some purchases for your home, chances are you can find great deals through online marketplaces. There are great consignment shops for adults and kids where you can pick up clothes and more at much lower prices than buying new. Renegotiate bills like cable, streaming or cell phone for any possible savings. Contact the company and simply ask “what’s the best plan you have, and should I be on it?”

Monitor Your Debt

There’s never a good time to fall behind on debt payments, but there are certainly worse times than others, including times of economic uncertainty. Falling behind on debt payments can result in costly fees and added financial stress. It might be tempting to rely on credit cards to help get by and make up budget shortfalls, but balances can add up quickly. When you use your credit cards, be sure to pay the balance off each month to avoid paying interest charges. Look for ways to reduce the interest on your loans or credit cards. You may be able to refinance an existing auto loan for a lower interest option or consolidate high interest credit card debt with a personal loan.

Prioritize Saving

Building regular savings into your budget is important. Whether it is saving for retirement, building an emergency fund, or saving for a home, setting money aside for the future is an important way to help hold off inflation. Even if you can only save a small amount every paycheck or every month, the savings will add up over time. If an unexpected expense comes up, you will glad you have some money set aside.

Set a New Normal

As inflation eats away at our purchasing power, it is important to reassess financial priorities to make sure you are spending money on things that matter most to you and your family. Now may be the time to reassess your budget and make adjustments that not only fit the financial realities of today but support your bigger picture financial goals and priorities for tomorrow.

If you don’t yet have a budget or you have not updated it in a while, Town & Country has several budgeting tools to help you get started. Visit our financial wellness page to learn more.

If you would like to talk with a member service representative about creating a workable budget, paying off debt or have other financial questions, contact us at info@tcfcu.com, or call 800.649.3495.