Sharp increases in the inflation rate can burst the best-laid financial plans. With inflation running hot at 8.6%, purchasing power plummets — and so might your ability to pay off debt and save for the future. Bottom line, it’s hard to keep your head above water.
Grab hold of a financial life preserver to dampen the effects of inflation on your bank account. Here are three tips to help you manage your money today:
1. Update Your Budget
Dealing with the challenges of rising prices requires an honest look at your budget. While you can see you’re spending more at the grocery store, it’s crucial that you know exactly how much more money you’re spending across the board — and what you’re spending it on.
Unless you update your budget categories to reflect real-life spending, taking control of your finances will be tough. Gather receipts, credit card statements, and other records, and use them to calculate how much you’ve spent in each category over the past 60 days. After you’ve determined which expenses are busting your budget, you can try to reduce spending in those categories.
For many people, increased fuel prices rank as one of the top expenses they can’t seem to lower in any meaningful way. If gasoline costs are topping off your budget, consider a one-two punch of paying less at the pump and driving less. Download a gas-saving mobile app like Upside or GasBuddy to find the lowest prices in your area, and make every trip count by running multiple errands in a single trip. You can also use less of your own gas by carpooling or taking alternative transportation.
2. Increase Your Income
Earning more money is the quickest way to close the gap between your shrinking bank account and the rising cost of basic expenses. The extra income earned by temporarily working overtime or starting a side hustle could lessen inflationary pressures on your finances. If spare time is limited, consider alternative ways to increase your income. These might include:
• Asking for a raise
• Adjusting your W-9 Tax Withholdings
• Creating a source of passive income
• Selling unwanted items online
• Renting out part of your home
3. Redirect Your Money
Use the money you save by streamlining your budget and earning extra income to reduce debt and grow your savings. While U.S. households are seeing record-breaking inflation, they’re also feeling the pinch of higher interest rates. Credit card companies are raising borrowers’ rates with each rate uptick imposed by the Federal Reserve.
If you maintain a balance on your credit cards or have other high-interest rate debts, those increased interest rates might cause you to lose the gains you’ve made. Instead, consider transferring balances to Lincoln Savings Bank Visa® Platinum credit card. Eligible borrowers receive a 0% introductory APR for the first 24 billing cycles. After that, rates are determined based on your credit health.
The savings you reap from eliminating interest can erase your debt balances faster and help you grow your emergency savings account.
We invite you to schedule a complimentary, no-obligation appointment with an experienced banker at Lincoln Savings Bank. They can provide a thorough review of your budget and suggest additional ways to protect your money against inflation.
