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| Watch the aount you spend |
Keep an Eye on Your Bank Account
Americans are struggling to keep up with inflation after reopening from COVID-19 and as the nation grapples with supply chain disruptions and the ongoing war in Ukraine. Expensive groceries, gas, housing, and other consumer goods have many people feeling the pinch as they can no longer make purchases as they did before.
Despite the Federal Reserve’s aims to curb the aftermath, many people are still affected by higher costs of goods and services. Even global healthcare costs are rising 10% annually, and insurance is necessary. Unfortunately, inflation looks like it’s here to stay into 2023 — but not all hope is lost. Signs show that prices are going to trickle down slowly over time.
Nevertheless, now is not the time to dish out money left and right. Instead, consumers must pay careful attention to their bank accounts. For example, you’ll want to avoid making unnecessary credit card purchases you can’t afford to pay off when your statement arrives.
Here’s everything you need to know about protecting your assets against rising prices in the new year.
The Year Ahead: What Goes up Must Come Down
The essentials are far more expensive than they were a year ago. As of September 2022, the U.S. Bureau of Labor Statistics (BLS) reported a 10.9% year-over-year increased inflation rate for groceries, while energy costs rose 17.6%.
Other notable price gauges included a 5% increase for medical care, an 8.4% hike for home furnishings and operations, and a 6.4% increase for personal care.
Those worried about ongoing inflation in 2023 might find relief from knowing that experts see prices dipping eventually. The recent New York Fed report projects inflation to increase by 5.2% rather than the estimated 5.9%, with a record month-to-month decrease sometime toward the end of 2023. The three-year and five-year outlook also shows less inflation than expected.
The report highlighted key areas of inflation, including food prices and gasoline — which it expects to be up by 4.7% as opposed to October’s 5.3% increase.
Of course, Americans must remain patient as the Federal Reserve intends to raise short-term rates to avoid a recession — a challenge for those most impacted by some of the highest living costs in 40 years.
5 Helpful Strategies to Keep up With Inflation
If you’re feeling financial pressure as you try to keep up with inflation, these five helpful strategies can help you save money and ensure your finances go in the right direction until there’s a break.
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| buying the essentials needed to survive |
- Buy Smartly
Before prices increased, you may have enjoyed eating out, movie dates, and late-night online shopping sprees. However, if you want to save up and ensure you can afford the necessities during inflation, you’ll need to make smarter buying decisions.
That means consumers should focus on buying the essentials needed to survive, such as food, water, gas, and medicine. Some ways you can make smarter purchases throughout inflation include the following:
- Switch to store brands at the supermarket
- Shop at thrift stores
- Look for sales and discounts
- Save coupons
- Put off large purchases until prices drop
Buying in bulk may or may not necessarily be the most effective use of your money, especially if only one or two people live in your household. Purchasing items based on your current monthly needs may help you prevent overspending. It could also avoid having perishables go to waste.
Conversely, nonperishable bulk purchases from a membership warehouse club are a better way to save money if your household has a lot of people.
- Set a Budget
You must set a budget throughout inflationary periods. This isn’t an easy task, but rising costs of goods are out of your control.
Consider your spending needs for essential items — how much do you need to set aside for groceries and gas each week? How much is required to pay your bills?
Try finding areas where you can save money, such as cutting down on Starbucks and making coffee at home. You might also consider canceling subscription services you don’t use as often.
- Start an Emergency Fund
Setting aside a portion of your paycheck for emergencies to keep up with inflation in the coming months may be wise. An emergency fund means you’ll have something to tap into as security when strapped for cash.
Imagine the car breaks down, or you’re suddenly out of a job and have bills to pay. An emergency fund’s purpose is to help you cover the costs.
However, as the name implies, these funds are for emergencies only. The money shouldn’t be used to go out for dinner or drinks with friends or to buy new clothes. Save the cash for unforeseen expenses that come up at random.
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| Save money on transportation and gas by walking occasionally |
- Use Alternate Modes of Transportation
Falling gas prices are a good sign, especially after peaking at an average of $5 in June 2022.
According to AAA, gas prices now stand at $3.24 as the average, compared to one month ago when it was $3.77. However, Americans may find that taking public transportation, walking, or biking places could help offset the costs of other inflationary areas.
Even using public transportation a few times a week can help you save money on gas or put off spending ample funds to repair your car when prices are so high.
- Continue Contributing to Retirement
You might be tempted to stop retirement planning during inflation. However, experts say that unless you recently lost your job, you should continue as you’ve been. Trends show that investments haven’t suffered too greatly during inflationary periods over the last 30 years.
Additionally, contributing or catching up to your Roth IRA savings account may be a good idea. The contribution cap is set at $6,500, and you pay taxes on the amount, so withdrawals are tax-free during retirement.
It’s essential to plan for your future financial security regardless of what’s happening in the economy. Try not to put retirement savings on the back burner until inflation passes.
Save Money Despite Rising Prices
Inflation poses a severe problem for everyone. Those on a tight budget have to be especially careful not to overspend. Consumers can protect their savings by following these tips to keep up with inflation in 2023 — and remember that this, too, shall pass.
Author: Beth Rush is the content manager and Managing Editor at Body+Mind. She is a well-respected writer in the personal wellness space and shares knowledge on various topics related to nutrition, fitness, holistic health, mental health, and disease prevention. In her spare time, Beth enjoys going for runs and trying out new fitness trends.