5 Tips on Budgeting and Saving to Help Fight Inflation Now
Going to the grocery store, doing your weekly shopping, running errands, and filling your gas tank have all become a lot more expensive as consumer prices continue to spike, causing sticker shock across the board. According to a U.S. Inflation Report in April 2022, the annual inflation rate hit a 41-year high of 8.5% in March, with gas prices increasing 48%, fuel oil by 80.5%, food prices jumped 9.4%, the most since April 1981, prices for housing 5.1%, and new vehicles by 13.2%. At the same time, most workers are not seeing an increase in pay to keep up with the unprecedented inflation we’re experiencing. To help our valued members, Camino has 5 tips on budgeting and saving to fight inflation now.
1. Create a Budget and Track Your Spending
One of the best ways to combat inflation is to create a budget and adhere to it. Budgeting is a simple and effective way to manage your finances and allocate your spending. Making a budget should be done at the beginning of the month or a few months in advance, devising a plan for your monthly income and spending. The 50/30/20 budget rule is a simple way to budget by calculating your monthly net income, which is your income after taxes:
- Allow up to 50% of your income for needs, such as food, housing, insurance, and transportation
- Leave 30% of your income for wants, such as dining out and entertainment
- Commit 20% of your income to savings and debt repayment
2. Reduce Your Monthly Recurring Expenses
Keep an eye on your recurring payments for all the services you subscribe to because they can quickly add up. These can include cable, streaming, internet apps, music services to premium channels, home deliveries, and Amazon. Check your monthly credit card statements and checking account to make sure you absolutely need these services and are using the services. Maybe it’s a good idea to cut back or cancel some of these services and save the money to spend on things that are essential.
3. Keep an Eye on Your Debit and Credit Card Spending
As prices are increasing across the board, it might be tempting to rely on credit cards to cover your expenses. But with the Federal Reserve raising interest rates to help fight inflation, credit card debt can become even more expensive and difficult to pay off. Interest rates are only going to continue to climb with two increases since the beginning of the year and several more planned for 2022; the cost of borrowing will come at a heftier price. It’s also important to make more than the minimum payment on your credit cards to help pay them off, so you can get rid of debt faster.
4. Be Energy Efficient and Resourceful
Try to use your appliances mostly after peak hours, from 4 to 9 p.m. Turn off all but essential lighting and electronics, adjust your thermostats, and use less hot water by doing your laundry and dishes during off-peak hours or on cold water. Ideally, it’s best to use energy-efficient appliances that can also help save energy and costs. Consider sealing your windows and doors or adding more insulation if needed as an easy way to save. Driving a hybrid or electric car can really bring down your costs, with exorbitant gas prices currently at about $6.08 a gallon in Los Angeles.
Limit the amount of driving you do. Try carpooling, biking or walking as much as possible, or taking alternate transportation. Check with your gas and electric companies for energy cost incentives, including rebates and lower energy rates, during off-peak times. Earn points at your grocery store for gas discounts or consider a discount club membership to help you save on gas and other essentials.
5. Refinance Your Home for Lower Interest Rates
Refinancing your home can help you quickly save on your monthly payments. With the extra cash, you’re able to use those savings to help pay for other expenses. Even if your current mortgage rate is only a partial percentage higher than today’s rate, a reduction in your interest rate could save you thousands of dollars over the lifetime of your home loan, offering both short and long-term benefits. And as the Fed keeps raising interest rates, it could be better to refinance now. To learn more about refinancing and other options to save on your home, contact a trusted Camino Member Advisor today.
Meet with a Camino Member Advisor to Help Now
Let Camino help you with your financial journey and help you better understand what we can do for you to help you budget and save during inflationary times. From refinancing your home, other loans, saving and checking accounts or whatever your needs are, Camino is here to help. We want our members to find the best option that works for them. Please go online at caminofcu.org, give us a call at 800-835-3400 to speak with one of our Member Advisors, or contact us for more information.