Inflation continues to put pressure on household budgets. From groceries to gas, record-breaking inflation means the purchasing power of your money is decreasing each month.
Our partner, GreenPath Financial Wellness, shares tips for navigating thisperiod of high inflation, however long it lasts. Be budget aware by following the steps below.
1. Take inventory of your full financial picture.
Has your household income changed? Have you adjusted your budget for rising groceries, transportation, or other expenses? Check your existing budget to see where you stand and where your money is going. If you don’t have a budget, it can help to create a simple spending plan or roadmap of monthly expenses. A good place to start is with resources like a budgeting worksheet to track your monthly income against current expenses.
2. Continue to build an emergency fund.
You can tap into it when unexpected circumstances arise like a medical expense or costly home repair. An emergency fund helps reduce the chance of taking on debt to cover an unplanned expense. It might be tempting to pause monthly savings as rising prices take a bigger bite out of your monthly budget. Resist the urge and put savings on autopilot with each paycheck. Even a small amount will add up over time.
3. Prioritize monthly spending in a time of rising prices.
Rethink certain monthly expenses such as subscription or streaming services. According to researchers, the average household has 4.5 streaming services and spends an average of $55 on them per month. This may not seem like much, yet $55 a month adds up to more than $600 per year. If you’re trying to cut expenses, ditching underused subscriptions can be a good place to start. As essentials get more expensive, figure out your new baseline. Limit credit card use and curb discretionary spending (dining out, entertainment). GreenPath’s Aligning Priorities workbook can help you make these decisions.
4. Monitor debt, especially as interest rates rise.
Paying off high-interest credit card debt saves you money in interest and improves your credit score. It also frees up room in your budget. Choose a debt payoff strategy that works for your situation. Consider GreenPath’s Debt Management Plan, which helps you pay off unsecured debt in 3 to 5 years. GreenPath can work with many creditors to bring your accounts current, lower interest rates, and eliminate fees.
5. Shop smart.
Research the best sales, coupons, and specials, especially on products that are low in inventory. Check dollar stores for deals on household items and stock up on those items where possible. Consider bulk retailers or wholesale clubs to stock up on items in large quantities for a lower per-use cost. Strategically plan your higher-cost purchases. Swap out brand-name items for generic as much as possible.
6. Keep tabs on your credit history.
As prices rise, it pays to keep tabs on credit history, which is used to calculate your credit scores. Your three-digit credit score helps determine whether lenders approve you for new credit and what interest rates they offer. Annualcreditreport.com is a trusted “one-stop-shop” to check your reports from Experian, Equifax, and TransUnion – the three industry-standard credit bureaus. You can also work with GreenPath to review your credit history.
7. Get independent guidance from a nonprofit financial counseling agency like GreenPath.
Everyone who contacts GreenPath receives a free financial assessment with certified counselors who lend an emphatic ear. Counselors look at your entire financial picture to help you ease financial stress and uncertainty. This is achieved through access to clear information and a personalized action plan.
8. Stay Budget Aware.
It pays to stay budget aware, especially as prices continue to rise. We encourage you to connect with a caring, certified GreenPath Financial Wellness counselor to discuss your specific financial situation.
This article is shared by our partners at GreenPath Financial Wellness, a trusted national non-profit.
McCoy members are eligible for free financial counseling from GreenPath, our personal money management partner. If you’re struggling to make payments or feel overwhelmed with your current financial situation, give them a call. You don’t have to face it alone.