5 Ways To Cope With Raising Prices
Date: June 24, 2022
Feeling like you are not in control of your finances is a major source of financial stress for people of any financial status. According to the U.S. Labor Department statistics, the inflation rate1 reached 8.6% in the six months leading up to May of 2022 - this is the largest annual increase since 1981. Worrying about how these numbers and statistics impact our finances can feel daunting and add unnecessary stress to individuals’ lives.
According to recent research2, 67% of Americans earning less than $100,000 are living paycheck to paycheck. With prices still on the rise, we can expect that number to continue to climb, which means more people are having to cut back even further than they already are. However, there are still ways in the current environment to continue chipping away at your financial goals while enjoying your life and having fun.
- Revisit your budget and “rainy day” fund - Having your buying power shrink as higher prices for essentials like groceries rise, means that the budget you worked so hard on can quickly be out of date before you even realize it. A budget that meets your needs will take much of the stress of day-to-day expenses off your back. Look for places that you feel comfortable cutting back and reprioritize where your money is going. You may find that a lot of services you pay on a monthly basis, like Netflix3 and Amazon4 have increased prices. Luckily, canceling and pausing these types of services is easier now than ever before. With a few clicks, you can get that extra money back until you feel financially ready enough to re-subscribe. With less “rainy day” dollars to go around, it is important to make everyone count.
- Continue working towards your savings goals - The most important thing you can do for yourself during times of high inflation is to continue putting away as much as you can afford. This will likely require you to cut back on some non-essentials, such as going out to restaurants, your daily Frappuccino and other expenses that quickly add up. As inflation creeps up, so are interest rates, which means that borrowing money in the instance of an emergency is going to be more expensive. Having a savings account that you can rely on will remove the stress of having to borrow money. However, the most important aspect of saving is habit and behavior. Once you stop, it will be much harder to pick it back up again once you are in a better place financially.
- Enjoying time with your family as gas and travel prices increase - Many families have felt disappointment this summer as they cancel their annual vacations due to increased prices making travel unaffordable. It is important to look on the bright side here and realize that it is possible to still make those summer memories with friends and family. The key is to think local - there are often day-trip destinations in your area that you might not have ever considered. If you normally travel for a beach vacation5, try to take a series of day trips to your local beach or lake instead. There is no need to put yourself into debt or a bad financial situation to take your family on a cruise or tropical getaway, when they could have just as much fun locally. Also, keep an eye out for family fun nights in your town or additional inexpensive entertainment opportunities like National Parks6 or amusement parks. Groups like AARP7 often offer various discounts for entertainment and travel. The key here is to get creative and remain optimistic, and you can still have a memorable summer with your loved ones as prices go up.
- Setting financial goals as inflation increases - Looking at your finances realistically is important as the environment around us changes. Ask yourself whether your previously set financial goals are still realistic given the inflation spike. You might need to either adjust your goal, or the time frame that you had planned to achieve that goal in. Be gracious with yourself as you navigate the changing environment and allow yourself to delay deadlines that you set before prices went up. Understanding that this does not mean your whole plan is derailed is key to remaining on track and not letting anxiety and fear get the best of you. Take care of your current needs, while continuing to work towards your overall financial goals, even if it is at a slower pace. Stressing over goal achievement or setting yourself up for failure with an unattainable goal are going to adversely affect your financial wellbeing in the long term.
- Look into products that can help off-set higher costs - Another great way to offset rising prices is with cash back and rewards cards. You can potentially save on each purchase you make, which can really add up in the long run. Affinity’s Cash Rewards Visa Signature8 card offers great cash back rewards on gas, supermarket, and restaurant purchases. Similar bonuses are also available on the Pure Rewards Visa8. If credit cards are not of interest to you, the Affinity Cash Back Debit9 allows you to earn 1% cash back on up to $1,000 in debit card purchases per month. Earning as much as possible on your savings is also important with climbing costs, and the SmartStart Savings10 account makes it easy to grow your savings with a very competitive rate and no minimum balance requirement. Look into and evaluate all of the options available to you in order to cut corners where possible and get some of that extra money you are spending sent right back to you.
As prices continue to rise, the most important thing is to remain calm and collected. Make the necessary changes and focus on enjoying the day to day with your family. When the cost of necessities feels overwhelming, remember that there are always ways you can cut back. If you feel lost or are having trouble reprioritizing your budget, do not be afraid to ask for help. Talk with a friend or family member for a third-party perspective, or connect with an expert11 at Affinity. They can help you contextualize the changing financial environment and better understand what moves you need to make to set yourself up for success.