If you’ve been paying attention to the Consumer Price Index lately, or even if you haven’t, you’ve probably felt the impact of inflation every time you’ve filled up your tank or gone to the grocery store this summer. At peak moments of inflation (8.5% annual rate for July), it’s essential to pay attention to how this affects your spending. While economic fluctuations are outside everyone’s control, the good news is that there are some practical ways to combat inflation’s effect on your budget.
Treat Inflation Like Any Other Budget Item and Make Adjustments
Firstly, use this chance to take a second look at your budget. If you made a budget six months to a year ago, it’s time to revisit it to adjust your fixed expenses for inflation. For example, pay attention to gas and utility bills, grocery budgets, and loan interest rates if you’ve borrowed money recently. Here’s just one example of how New Yorkers are dealing with rising food costs. More accuracy will help you decide where else you need to trim to make up for the added expenses caused by inflation. If you’ve been getting subscription service meal boxes, maybe it’s time to hit up the grocery store again to get more control over your monthly spending. Or, if you have a car that consumes a lot of gas, consider entering a carpooling schedule for school drop-offs or working in some public transportation on errands if available.
Make Sure Your Emergency Savings is Squared Away
While it sounds pretty basic, a savings account for emergencies can still make a world of difference when the costs of goods are up! However, a survey at the beginning of 2022 found that over half of Americans are not prepared to meet a $1,000 emergency expense with savings. If you fall into that category, consider setting up a savings account as the first step toward a more secure financial future. DEXSTA has several savings account options to help you create more financial independence.
Get Creative on How To Combat Inflation By Supplementing Income
In reality, we all know that a weaker dollar damages our spending power, affecting our annual income. Considering what other income streams you might have can help supplement the weakening effect of inflation on your earnings. Investing in rental properties is one possible way to earn passive income on your money. Another is to Airbnb your home or to create an Additional Dwelling Unit (ADU) on your property as a rental. If the rental market isn’t a possibility, you could open that Etsy shop you’ve been dreaming about or even try flipping furniture items on Facebook Marketplace. Think of it as fun way to make a few extra dollars and see where it goes!
Use a Time of Inflation to Invest in Your Financial Literacy
One of the perks of joining a credit union is all of the free resources available to improve your financial situation. Our Banzai tools are interactive and accessible tutorials on financial topics like getting out of debt, buying a home, calculating a budget, and even articles addressing inflation. With so many free tools to set yourself up for financial success, you can optimize the money you have now to make it go further. These benefits can go just as far as extra cash when you invest in better spending and saving habits over the long term.
Optimize Your Money and Combat Inflation with DEXSTA
Inflation has a broad reach which makes it difficult to avoid. Optimizing what’s within your control can help combat how inflation affects your budget. If you’d like to discuss opening a savings account with DEXSTA or want to learn more about our free financial literacy Banzai courses, stop by one of our branches or call us at 302-571-0522.