Wednesday, February 23, 2022

How to Survive When Inflation Rates are High

In January of 2022, Inflation hit an annual rate of 7.5% which is the highest it’s been in 4 decades.  The annual average is supposed to be 2.3%, so you can see how high this is. As well, the Consumer Price Index (CPI) is the highest it’s been since 1982. The CPI is a measurement of how much consumers have to pay for necessary goods like bread, milk, and transportation. For those of you who have been feeling like your paycheck isn’t stretching as far, know that it is a real problem across the nation. Prices are rising and consumers are learning to cope. 

The Wall Street Journal recently released an article about tips from the 1980s for surviving inflation. What we are experiencing now is significant, but 1980 had it much worse. Through the ’70s inflation rates climbed, reaching a whopping 14% in 1980, and people who remember what that was like have shared some of their stories and tips. Below we have made a summary of the lessons they taught.

  1. How to manage rising electric prices:

    One good way to combat increased utility costs is to turn down your heater at night (to about 65 degrees). Using more blankets at night and wearing warm clothes at home can help reduce your monthly expenses. That way, you’re using the majority of your heating costs for the times you’ll benefit the most from them. As well, some energy companies charge different amounts for energy consumption at different times of the day or at different times of the month. Look into your energy provider to see if they charge more during “peak hours” and try to avoid watching TV and having lots of lights on around those times.

  2. How to manage rising gas prices:

    While gas prices are high, It is good to drive as fuel-efficient as possible. This means coasting down hills, accelerating slowly, not driving over the speed limit (because driving faster tends to consume more gas), and using cruise control while on long trips. While this isn’t a perfect solution, it does stretch your time between fill-ups. You could also consider carpooling with coworkers, taking the bus, or biking to work when possible to cut costs.

  3. Postpone expenses that aren’t necessary right now, and take care of what you have so it lasts.

    Simply being frugal can go a long way. If there is something that you want, but your budget is tight, consider whether it is really a necessity at this time. Do you have something right now that you could use instead for the time being? By making what you have last, you avoid the cost of replacing old items. This could include things like learning to patch clothes or doing a clothing swap with friends instead of shopping.

  4. When you do need something, try to buy used.  Thrifting can still save some money.

    When there is a necessary purchase that comes up, make sure to check out the used market, both online and in-person, to get a feel for your options. While some things shouldn’t be purchased used, most things are just fine. Often sites like Facebook marketplace and craigslist offer low-cost items that are still of decent quality. You can also look for garage sales, moving sales, and traditional thrift stores.

  5. Know that it’s okay to negotiate things you’re buying, especially with large purchases.

    One woman shared that telling her personal story helped her to get lower interest rates on her car loan. As well, working to keep your credit score up by only making purchases you can pay back quickly will give you a better chance in your negotiations.

  6. Saving money on food:

    The first rule of thumb is to eat out less often. Eating at home is almost always cheaper than eating out, but it’s more important when money is tight. As well, there are lots of things you can do to save money at the grocery store. First, always shop with a list, and stick to it! It’s easy to impulse purchase unnecessary foods when shopping and having something to be accountable to can help. The second is to buy value brands. Often the “off-brand” items that are of similar quality cost a lot less than well-known brands.

  7. Finding entertainment at home:

    Going out for date nights and time with kids doesn’t have to stop, but spending money on these outings should be reconsidered. Get creative with at-home hobbies, entertainment, and dates. Working on projects or learning something new can be a fun way to spend time with family. You can also consider playing games or having a picnic at your local park. When it’s cold, try making hot cocoa and s’mores, reading stories together, going on lunch dates instead of dinner dates, or playing board games.

  8. Long term investments

    Though not mentioned in the original article, long-term investments are also a g

    ood way to protect your finances from the effects of inflation. What types of investments a person chooses to work with is a very individual decision, but Financially Fit offers resources to learn about different types of investments and accounts. If you’d like to learn more about this, view our website for information on working with FFE.
If you have questions about inflation and want to understand it better, check out this blog post to learn about the basics of what inflation is and how it affects you. If you’d like to view the original Wall Street Journal article, click here. Feel free to reach out with any questions, and check out our social media for weekly financial advice.

Here to help,
Your Financially Fit Team.

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