How Much Is Inflation Affecting You and The Average American Family This Year
on Topics: Economy | Personal Finance
According to an article in the New York Times, inflation is rising faster than expected. Food prices and gasoline continue to climb weighing on household budgets. Between housing, food, utilities, gas and other goods, the average cost of living rose by 8.2%, leaving inflation at a near 40 year high. Inflation is hitting everyone, especially volatile are low-income households. The folks at NerdWallet conducted a study on household spending and determined that inflation could cost your family an extra $11,500 this year. That’s close to $1000 a month in increased living expenses depending on your household income. So, what can you continue to do to help combat these increases and come out ahead?
There’s no one silver bullet to combat inflation and save money. Determine the difference between needs and wants. You need to pay for rent, mortgage, food, etc. You do not need to go out to dinner or grab that latte. You may have to make some difficult decisions, such as putting off any large purchases. That new or used car may have to wait. That vacation to Bermuda may have to wait until next year. Turn off subscriptions to services you don’t need, such as streaming services or pre-made food services. Learn to spend more time at home cooking and watching reruns. Start thinking “emergency fund.” Find ways to save money and place in a savings account or other interest earning account. Re-evaluate your budget. Where can you make some cuts? Those small adjustments add up.
As inflation keeps rising, the ability to remain flexible begins to wane. Work with your financial adviser or debt counselor to help you make those tough decisions. At the end of the day, know you are not alone. We are all experiencing the same increase in costs. It’s certainly affecting us all differently, but we are all feeling the pinch. Now, what are you going to do about it?