Inflation is putting financial pressure on U.S. households. Cost hikes make it harder for people to pay for expenses and erode the buying power of money in savings. And the burden is especially high for low-income households, for whom spending on housing, groceries, energy, and transportation makes up a higher portion of income.
Adjusting your budget to cut expenses anywhere you’re able can help you weather higher costs. Here’s how to save money now to fight inflation.
1. Cut costs at the grocery store
Grocery costs are up, with some foods being hit harder by inflation. Here are tips to save money on groceries:
- Opt for cost-effective foods. Swapping name-brand products for generic versions can help you save money without noticing a major difference.
- Meal plan. Create a meal plan each week to avoid impulse shopping or relying on takeout during the week. To save more, plan meals using your grocery store’s weekly sales flier.
- Comparison shop. Compare the price of grocery products by weight to determine which option is the best value. You may also be able to save by buying staples such as pasta or canned goods in bulk.
2. Save money on transportation
If surging gas prices are blowing your budget, your first course of action could be limiting your driving as much as possible. If your work allows it, ask to work from home more often. Running your errands in batches, carpooling, or using green transportation options such as public transportation, biking, or walking anywhere within a short distance can also save you money.
3. Plan ahead for cheaper vacations
It may make sense to push back large vacations, if that’s an option for you. Taking a staycation, where you stay close to home and visit local attractions, take day trips, eat at local restaurants and relax at home, can save you a lot of money now—which may make taking your dream vacation without accruing debt easier down the road.
You can also save with a travel rewards credit card that provides a percentage back on qualified purchases in the form of points or miles. Redeeming your accrued points or miles for airfare and hotel bookings can save you a lot of money on travel, as long as you avoid paying interest charges that negate your rewards.
4. Check your budget
It’s always wise to audit your budget periodically, as your goals and spending habits change over time.
Readjust your spending goals or commit to reducing spending if you find you’re living beyond your means.
Look for areas to cut back. Spending less on discretionary items could give you an instant cash flow boost.
5. Pay down credit card debt
As the price of just about everything increases, it can be tempting to rely on credit cards to afford your expenses. But taking on debt can stretch your budget, and as the Federal Reserve raises interest rates to combat inflation, credit card debt can become even more expensive and difficult to pay down.
Making more than the minimum payment on your credit cards is critical to paying them off. To make larger debt payments and get rid of debt faster, consider using a debt repayment strategy or a balance transfer to consolidate your debt.
6. Earn money on your savings
Most saving methods can’t outpace the rate of inflation, but putting your money somewhere where it will earn higher interest can reduce the eroding effects of inflation.
A high-yield savings account can help you earn more interest than a traditional savings account.
The bottom line
Inflation makes basic housing, energy, food and transportation costs more expensive. If your budget is under pressure, create a strategy to cut costs wherever you can.
For more information about budgeting and improving your finances, see the following articles: