Inflation and Your Budget - Economist Thomas Soul wrote of inflation, “It’s a way to take people's wealth from them without having to openly raise taxes. Inflation is the most universal tax of all.” It’s true that inflation hurts everyone by decreasing the value of the dollar. We’ll discuss ways to reduce that pain today on MoneyWise.
- HOW BAD IS IT?
- By some estimations, inflation is costing the average American household $2,000 to $3,000 per year!
- And now Bloomberg is projecting that inflation, currently running at 7.9%, will gobble up $5,200 of your hard-earned dollars this year!
- A lot of that will be in the form of much higher food, gasoline and home energy bills, most of which you’ve already seen. That alone will account for about $2,200 less spending power annually.
- Grocery prices continue to rise dramatically with the biggest price spikes hitting meat.
- While wages and savings grew somewhat during the pandemic, analysts predict that those savings will dwindle, forcing more Americans to find work. That won’t help with inflation, however, because an expanding labor pool will stunt wage growth.
- Energy costs have jumped more than 25% since last year. Grocery prices are up nearly 9% from a year ago, while clothing is up around 7%.
- The federal government has insisted that this inflation is only temporary, but many economists say there’s really no end in sight, at least not yet.
- WHAT CAN YOU DO?
- A couple of weeks ago we listed ideas to cut spending so you can stay within your budget. Some of them bear repeating as the news about inflation grows more dire.
- Did you know that many convenience stores will give you a break at the gas pump if you pay with cash? So look for places offering a reduced cash price. You’ll have to go inside to pay, so just be sure to avoid the temptation of buying a lot of high-priced junk food while you’re in there.
- Studies show you can also cut spending from 10 to 30% by using cash for everything. It’s just harder to part with real dollars than using a credit or debit card.
- Here’s another idea that some folks are trying: oNe day a week, don’t spend any money at all. Don’t buy coffee at a convenience store that day, and don’t browse online to avoid buying something on impulse.
- By the way, when you have to buy something online, did you know that you may be able to save by using an incognito browser? It deletes your browsing history so companies can’t see what you’ve been looking for. Sadly, they sometimes automatically raise prices if they know you really want it based on the number of your clicks.
- If you have to buy a major appliance, look for “scratch and dent” items or floor models.
- Or just plain ask for a discount. You might not get it, but it never hurts to ask!
- You can also use the 30-day rule for buying anything over $100. How does that work? If you see something you want to buy, write it down and put it on the fridge door. After a month, if you still want it, make the purchase. But the odds are your interest will have waned by then.
- You can also sign up for paperless billing and auto pay with service providers like AT&T and Xfinity and some utilities. Many offer discounts on your monthly bill for signing up. It also makes it easy to manage your account with your smartphone.
- Those are some ways you can fight inflation on your own. Proverbs 21:20 reads, “Precious treasure and oil are in a wise man's dwelling, but a foolish man devours it.”
On this program, Rob also answers listener questions:
- Does it make sense to pull cash out of a retirement fund when money is tight?
- What are the biblical guidelines on where you should give your tithe?
- How do you determine whether it makes sense to keep a long-term disability policy?
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