Although economic news points to a better economy, inflation is still with us. And while you can’t control what happens next, you can manage how you save and spend. Making small, intentional changes can have lasting positive results. When you take charge of your money, you’ll be on your way to a better year financially.
1. Build a Realistic Budget
For the past three years, consumers have contended with higher prices – from groceries to gas – to housing – it’s been a lot. That’s why taking a realistic look at how you save and spend now will help you figure out where to cut back and save more. Start by tracking all your income and expenses over a month. This includes everything from your rent or mortgage payments to your daily spending. A quick way to do this is to calculate your spending using our Household Cash Flow Tracker.
Once you have a clear picture of your spending habits, eliminate unnecessary extras. Look for subscriptions, memberships or services you don’t need. Consider bundling internet, cable and phone services to save on regular bills. Don’t be afraid to negotiate better rates with your service providers; they may be willing to offer discounts to keep your business.
2. Cut Back on Energy Use
Making changes in your daily habits can help reduce energy costs. Start by minimizing using lights and electronics when they’re not needed. Turn off lights when leaving a room, unplug devices not in use and use natural light during the day. Consider using energy-efficient light bulbs, which not only last longer but also consume less electricity.
Another effective strategy is to use smart technology to better manage heating and cooling. Programmable thermostats let you set different temperatures for different times of the day. This makes sure your heating and cooling systems don’t run too much when you’re away or asleep.
3. Reduce Food Costs
According to statistics, Americans spend about $3,600 a year eating out. If you tend to eat out a lot, add up the costs when you’re reviewing your budget and see if you can cut back a bit. Think about ways you can change your routines, such as planning meals ahead of time. Start the day off right by cooking breakfast at home or skipping a few morning coffee runs. Plan and cook a few meals weekly and use the leftovers.
When shopping, opt for generic or store-brand products over more expensive name-brand items. Often, the quality of these products is similar, but they come at a significantly lower price. Buy bulk items with a longer shelf life. Actively seek out sales and use coupons to maximize your savings. Many grocery stores offer loyalty programs that provide additional discounts.
4. Save on Gas
When you take care of your vehicle, you can save more at the pump. If you haven’t done it in a while, get your tires checked and invest in regular oil changes and stick to a maintenance schedule. When driving, use cruise control when possible and avoid speeding up quickly and hard braking. If you’re running errands, plan your trips to minimize driving distance. If you live in an area with good public transportation, consider using it or carpooling for work commutes.
5. Get a Handle on High-Interest Debt
If you’re not paying your credit card balances off each month, a debt paydown strategy can help you make progress. If you have multiple credit card accounts, focus on the card with the highest interest rate first. Pay the most you can afford, while paying minimum amounts on the others. Once you have that debt paid off, move on to the next card.
You might also consider a personal loan or credit card balance transfer with no transaction fees to consolidate debts. This could allow you to make just one monthly payment while potentially saving on interest.
If you feel like you’re a bit stuck, get one-on-one counseling, with
GreenPath Financial Wellness. The experts at GreenPath will help you create an action plan to pay off debt once and for all.
6. Keep the Savings Train Going
While rates have dipped a bit, consider a high-yield savings account, certificates of deposit or share certificates to build savings. If you don’t have an emergency fund or it’s been depleted, set aside automatic contributions to a dedicated savings account. By using a separate account not connected to your checking, you’ll avoid dipping into it when you overspend. Share certificates and CDs offer a way to earn more on your savings without the risk of investing. CDs earn interest, while share certificates earn dividends — over a specified time. When the term ends and the certificate matures, you can withdraw the balance or renew the certificate. If you don’t need the money right away, it’s an efficient way to build savings.
7. Make Investing a Part of Your Life
Inflationary periods can be daunting, but also presents opportunities for investors. Staying invested during inflation is crucial for maintaining and growing your wealth. The key is to maintain a long-term perspective and avoid making impulsive decisions based on short-term market fluctuations. By adopting a disciplined approach, you can navigate economic uncertainties more effectively.
One of the most common ways to invest regularly is through a 401(k), offered by most employers. The 401(k) plan lets you contribute a portion of your pre-tax income to a retirement savings account. A great benefit: Employers usually match contributions, typically from 2% to 8%. If you’re a school employee, you're fortunate to be able to save for retirement with a CalSTRS or CalPERS pension plan.
- Investing Choices: One strategic approach is to select assets that typically perform well during inflation. Stocks, for example, can offer protection against inflation as companies can pass on higher costs to consumers, thereby maintaining their profit margins. Real estate is another asset class that tends to appreciate during inflationary periods, as property prices and rental income usually rise. Commodities, such as gold and oil, are also known for their ability to hedge against inflation, given their intrinsic value and limited supply.
8. Get a New Job
In an inflationary environment, securing a new job or advancing your career can bolster your financial stability. Take the time to update your resume to reflect recent achievements, skills and experiences. Tailor your resume to the specific job you’re applying for, highlighting relevant qualifications that make you a strong candidate. Invest in learning new skills through online or local educational programs. And don’t neglect opportunities that may be available through your current workplace. Talk to your manager about jobs you may be interested in.
Leveraging your professional network is another crucial aspect of job hunting. Reach out to former colleagues, mentors and industry peers who might provide valuable insights or leads. Attend industry events, join professional organizations, and engage in online forums to expand your network. Personal referrals can often lead to opportunities not publicly advertised, giving you an edge in the competitive job market. Use job search platforms well by setting up job alerts and changing your search criteria to get notifications about jobs matching your skills and interests.