How to Budget for Inflation

Stretch your dollar further with these tips on how to budget with inflation in mind.

With the costs of everyday items like food and gas on the rise, many people are looking for ways to track their spending and save where they can. A basic definition of inflation is a time when prices increase overall, meaning your dollars won’t stretch as far as they did before. So how do you combat it?

Effective money management has always been an important responsibility for all households, during an inflation period or not, for financial success. So, whether you’re calculating the amount of money you need month-to-month or saving for a specific purpose like buying a home, a budget is a first step that can help you plan. Learn how to set up your own budget and then find areas where you can reduce expenses.

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Building a Budget

Start by calculating your monthly income. This includes not only the amount you may get from a regular paycheck, but also any money you get in government aid, child support, pensions, etc. Once you know the amount of money you have to work with each month, you can compare it with your spending and figure out how much you could assign to savings.

So how do you know how much you spend monthly? Add up all your monthly expenses including your rent or a house payment, utilities, car and medical. Don’t forget about costs associated with childcare, food, personal items or any additional debts. Consider what items are increasing in cost as well.

Once your total income and expenses are established, it’s time to set some goals and build a budget around them. Ask yourself what you want to spend in each category vs. what you are spending now and evaluate where spending could be adjusted or cut completely.

Setting priorities on covering your needs before wants will help you achieve your financial goals, from paying down debt, building an emergency fund or saving for your first home. We recommend using a budgeting sheet to help keep you organized. Committing to a plan can be challenging, but stick with it, and your financial goals can be achieved.

How to Save Money

Cutting down costs can seem difficult even without inflation, and we get that it takes more than just brewing a cup of coffee at home instead of running by your local coffee shop. While small changes can save you a lot in the long term, we want to give you more. Here is a list of ways to help your wallet in an inflation period and after:

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1. Travel

  • Keep an eye on the pumps of different gas stations and fill up at the cheapest ones. You can also join loyalty programs for specific gas station brands to save at the pump as well.
  • If you have a credit card that gives cashback or rewards points at gas stations, use the card at the pump for the extra benefits. However, when using a credit card, remember to pay your monthly bill on time and in full every month.
  • If you have the flexibility to work from home some days of the week, take advantage and save on the commute.
  • If you and a coworker live near each other, discuss if carpooling could be an option with your schedules. You can also team up with a parent you’re friends with and take turns swapping out driving both of your kids to practice and afterschool activities.
  • Try to reduce multiple or unnecessary trips by shopping at a store that has most or all of what you need or go to a more centralized location that has the stores you need.
  • Since rising gas prices will make road trips more expensive, opt for staycations or destinations closer to home. Being a tourist in your own city or area can be fun, and you may find some local hidden gems you weren't aware of. Contacting your visitors' center or going on your city's website will usually provide you with a list of attractions as well.

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2. Food

  • Make a list before you go to the grocery store and check your fridge and pantry in case you have the items already on hand, especially food staples in your home.
  • Sign up for ads from stores you frequent and keep updated on sales and coupons.
  • Inflation doesn’t affect prices equally when it comes to food, so some items like certain proteins or produce may be cheaper than others. Substituting for a different cut or source of meat or a different type of greens for your salad lunches can help keep costs down.
  • Make homecooked meals more filling and last longer by adding in more affordable bases or sides. For example, beans and rice is a favorite in a lot of families and is a complete protein, so if you want to buy less meat but need to boost up your meal, this can be a great addition. Throwing in more vegetable that are affordable can not only cover your food groups but also stretch out a meal. Take leftovers for lunch or repurpose them into a side dish for a meal later in the week.
  • Turn to generics in place of your preferred brand, and buy in bulk, if possible, but only if it is truly cheaper (look at the price by unit) and you will consume all of it.
  • Want to go out for dinner? Check out those rewards on your credit card. Many of them offer cash back or you can use points to buy gift cards at a discount. Trade some in for a gift card to use on your next date night.

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3. Entertainment

  • Review all your subscriptions, from memberships to streaming services. Have a free gym in your complex or work, or a treadmill and weights at home? If so, you may want to cancel your gym pass, especially if you are not using it regularly enough to justify the cost. Also, be sure to check your phone for any app subscriptions you are signed up for but may have forgotten about or don't use as much. If you don't get a chance to watch much TV have several streaming services, you may want to keep the one you watch the most and cut the others.
  • Take advantage of free activities for you and your family like checking out books and movies from your local library, hiking at a nature center, seeing any free movies or concerts at the park, or going to the community pool.
  • Still meet up with your friends and family, but instead of going out, take turns hosting at your homes for potluck dinners or board and lawn games.


4. Clothing

  • Do you have an event like a wedding or party to go to and need something to wear? Instead of buying a new outfit for one occasion, see if you can borrow from a friend’s or family member’s closet.
  • Are the kids growing out of their play clothes? Shop at yard sales and thrift shops, and you'll usually find clothes in great condition for cheap.
  • Look at online marketplaces and consignment sales to find a great deal on clothes, many of them still with the tags on them and never worn.

This list isn't exhaustive, and not every household can follow all these suggestions due to their own unique circumstances. But it can be a practical guide on navigating inflation right now. We know budgeting is not always easy as it sounds, so check out this helpful breakdown of different budget styles to find the one that's the best fit for you.

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