How to Adjust Your Budget for Rising Prices
If it seems like you’re spending more lately on food, clothing, gas, and other essentials, you’re not imagining it. The Consumer Price Index, which measures the average price of goods in the U.S., rose by 5.4% from June 2020 to June 2021 — the most rapid rise since 2008. That means just about everything you’re buying is more expensive. If you’re having trouble stretching your dollars, here are some tips on how to adjust your budget for rising prices.
Although it’s not fun to be spending more on the things you buy all the time, prices will even out eventually. The economic recovery, lingering supply chain interruptions and even extreme weather are all having an effect on the prices of consumer goods. But once things calm down and we reach a long-awaited sense of normalcy, prices should be less volatile.
Review Your Spending
Different parts of the country have opened at different rates, but it’s safe to assume everyone is out and about more in the last few months than during the previous year. That means your spending habits have changed again, even if you don’t realize it. It’s a good bet you’re shelling out more on gas, entertainment and dining out. Keep a spending log for two weeks to find those areas of the budget that have stealthily crept back up without you being aware of them.
Get Back to Basics
Make saving money a priority by doing all those things you may have let slide for a while. This can include comparing prices before buying, using coupons and shopping in-store rather than online (if you’re comfortable doing so). In particular, grocery shopping in person allows you to compare and save on the spot. Plus, you usually have more choices available and the ability to use coupons, shop sales and receive additional discounts with store loyalty programs.
Try to Cut Costs
Your budget isn’t set in stone. Review your main budget categories and look for areas where you can cut costs. If necessary, cut back to a bare-bones budget for a few weeks (or months) to give yourself some breathing room. Try to negotiate lower rates on everyday bills like phone, internet and insurance. Spending some time making phone calls is well worth it if you can keep more money in your pocket every month.
Make Extra Money
Depending on your schedule and family demands, consider a part-time job or side gig to make ends meet. And there are plenty of ways to make some extra money that don’t involve an additional job. Clean out your closets, attic and garage and have a massive blow-out yard sale or take higher end items to resale consignment shops, or sell them on eBay, Poshmark or other direct selling apps. Use the money you make to stretch your budget or tuck it away in emergency savings.