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Good money management is always a useful skill, but given that inflation rates in the US have recently reached a 40-year high - it's clear that getting ahold of your finances has never been more important.
In this guide, we’ll help you gain an understanding of what exactly inflation is, and how you can save money during times of high inflation.
What is inflation?
You’ve probably heard hundreds of conversations about inflation, and the impact it can have on the economy over recent months. However, in order to truly understand the situation, it's important that you’re able to answer the question: What exactly is inflation?
By definition, “inflation is the increase in prices of goods and services in an economy”. In the US, these changes in prices are measured by the CPI (Consumer Price Index), where you are able to see the prices of specific goods have changed over the year, therefore creating a percentage increase.
Inflation does not always have to be a bad thing, as it can be a tool for economic growth and change. However, high inflation hits consumers hard - given that they are no longer able to buy as many products as they were previously. As such, it can have an impact on your quality of life.
The most recent CPI indicated that inflation in the US is 8.6% - a figure that has been steadily climbing.
How can I save money during times of high inflation?
Thankfully, there are plenty of steps you can take to ensure you continue saving money during times of high inflation, without having to dip too heavily into your savings account.
Start using coupons.
Cutting back on unnecessary spending is the easiest way to save money during this time. For example, a recent study found that the average household in the US could save $1,465 per year by utilising coupons when shopping.
Ensure you’re getting the best deal on utilities.
It may also be worthwhile to compare prices for utilities across different providers, to ensure you’re getting the best possible deal. If so, be sure to tell your current provider the deal you’ve uncovered elsewhere, as they may provide you with a counteroffer in order to maintain your custom.
Cancel unnecessary subscriptions.
Subscription services are designed to make our life easier or more enjoyable - but if you aren’t using them, you’re basically throwing money down the drain. Despite this, a recent study found that 42% of consumers are currently paying for subscription services they do not use or weren’t aware that they had. As a result, go through your expenses carefully to make sure you’re not paying for something unnecessarily, especially if you’ve signed up for a lot of free trials in your time.
Save on fuel.
Fuel costs are often hard hit by inflation. As a result, those looking to save money during this time may want to look into ways they can save on fuel costs. For example, you could utilize public transport where possible, or look into carpooling to and from work. If you drive your kids to school each morning, see if other parents in the neighbourhood are interested in carpooling or sharing the duties.
Learn to budget.
By now, you’re probably well are of the merits of budgeting - whether you’ve been saving to buy a house, or simply want to improve your financial situation. However, in times of high inflation, your ability to stick to a budget becomes all the more important. As such, if you struggle to hold yourself accountable to your budgeting and spending goals, you may benefit from downloading a budgeting app on your phone. This is because it will provide you with a visual method of tracking your spending, while also sending you alerts when you’re close to hitting your budget.
When budgeting, you should also allocate a small amount of money to go into your savings account each week. Even a few dollars here and there will make a difference in the long run, especially if you find a savings account with good interest rates.
Conclusion.
While it’s easy to worry when you notice the price of just about everything increasing (while your salary remains the same), there are plenty of ways in which you can save money during times of high inflation, whether it simply involves cutting back a little on your spending, or becoming a couponing pro.