Managing Your Household Budget During Inflation

Whether you are going to the grocery store or the gas station, it seems like everything is costing more. It’s not your imagination.

The question is, how do you manage your money when it takes more of it just to make ends meet?

We hear terms in the news about the economy we may not fully understand. Although it can be overwhelming, understanding the basics is fairly straightforward. One term you may hear is inflation. It can sound scary, especially if you don’t have a finance degree. In a financial chat GreenPath’s Chris Dlugozima explained inflation this way in a recent video chat, “Inflation is the cost of things (necessities like gas, food, and everyday basics) getting more expensive.”

Coping with inflation means managing budgets, creating a spending plan, and keeping a close eye on what money is coming in and going out related to your personal finances. Here are some tips to help manage your debt and household expenses at a time when we are all paying even closer attention to every dollar. If you are concerned about what is going on with inflation, interest rates, and the costs of everyday items, you are not alone.

When it happens, inflation does affect everyone, but it can touch people differently, depending on what is going on in your particular area and household.

Many families across the country are facing rising gas prices, more money spent at the grocery store, as well as housing and rent costs that are higher now than they have been for decades. A good example is rent costs that are up as much as 17-percent at the same time last year, according to national data.

One way to offset the effects of inflation is to bring in more money to your household. Do you have a hobby that could generate additional income? Do you have a small business that could produce more income? Although it may be an uncomfortable conversation, you may want to consider asking your employer for a raise. There are a number of ways to generate more income for the household and reduce the burden of rising prices. Increasing the amount of money coming in can help pay bills and make ends meet.

We know what we read in the news, but is there anything we can do to make inflation’s impact a little easier to deal with? As much as possible, even during these challenging times, you want to have a plan and then stick to it. That means being a smart shopper, not over spending, looking for deals where you can find them, being careful about credit spending, creating a debt payoff plan. Things are challenging right now, but you can also consider a future, after things return to some semblance of “normal.”

From the time you were old enough to work, did you ever look at your paycheck and wonder where all the money went? As inflation has hit a 40-year high, it is even more important to figure out your finances to make sure you aren’t over extended financially.

Some of the best ways to navigate rising prices is through budgeting, consolidating debt, and saving. All three can ease the burden of rising inflation. As prices of goods and services continue to go up and families search for solutions to meeting their basic needs, all three can be a challenge, but are no less important.

Your household budget can get away from you if you’re not careful. Those seemingly small monthly bills can add up and eventually have an impact on your overall budget. To stay on track with your household budget, look realistically at everything you spend on a monthly basis. While you should be mindful of costs and income, it doesn’t mean you have to go to extremes. Understand where you are right now, and spend appropriately.

As prices continue to fluctuate, this is a great time to take a close look at your budget frequently. An item for the family may have been one price last month and it could cost even more the next month.

Has your household income changed? Have you made adjustments for rising grocery, transportation or other expenses? A good place to start is to use a budgeting worksheet to track your monthly income against current expenses.

Along with tracking your income and expenses, you also want to monitor your debt. To keep up with rising prices, some Americans are using their credit cards more than they normally would. This can quickly become an issue, especially if they aren’t able to keep up with payments or fall behind. Late or missed payments can affect your credit report, making it more challenging to get favorable interest rates or make larger purchases. Having a debt payoff plan is essential to your financial success and sets you up for more savings, better credit, and can ease your mind if or when interest rates or inflation rise in the future.

Regular budget reviews give you a chance to consider what expenses are must haves, wants, or items you could consider cutting out altogether.

If things are tight, consider cutting out things you don’t need, like streaming subscription services. You can also contact service providers like cable or mobile phone bills to negotiate a lower rate.

It is also smart to look for ways to reduce common household expenses like energy and even gasoline. You can work with your energy provider to put yourself on a consistent monthly payment plan. This will help reduce the surprise of higher bills during high usage months when temperatures are very high or unseasonably low. Energy savings can impact what you pay by as much as 5 – 10% per month on a residential bill, according to the Department of Energy.