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Inflation is reaching levels not seen in 40 years, and US money portfolios are feeling the pressure.
Prices are soaring on everything from energy to food to shelter, costing the average American family an extra $327 a month, according to Moody’s Analytics. That’s higher than last month’s estimate of $296 a month.
The latest figure is based on an 8.5% year-over-year rise in CPI in March. The index measures a basket of goods and services.
Food prices are up 1% from last month and 8.8% over the past 12 months, while gasoline has jumped 18.3% since February and 48% from a year ago.
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However, there is some good news, according to Moody’s Analytics Director of Research Ryan Sweet, who conducted the analysis.
“We expect March to be the peak of year-on-year inflation growth and that it will gradually decline,” he wrote.
However, it is expected that it will take some time for inflation to subside. With that in mind, here are a few things you can do now to try to mitigate that $327 monthly drop in your budget.
1. Do a weekly budget check
Since rates increase frequently, it’s a good idea to review and reevaluate your budget on a weekly basis, said money expert Sahriniz Pearce, founder of the personal finance blog Poised Finance & Lifestyle.
“You want to be aware of where all your money is going and give yourself the opportunity to cut another area of your budget to make the numbers work,” she said.
One way to cut costs is by cutting out things you don’t need, such as subscription services. You could also try negotiating lower bills such as a cable bill or car insurance, suggests Misty Lynch, a certified financial planner with Walpole, Massachusetts Sound View Financial Advisors.
Save energy by unplugging devices when they’re not in use or by using keyed power clips that let you turn off products connected to them completely. By doing this, you can save 5% to 10% of your residential energy use, according to the Department of Energy. Turning down the heat can also help save money.
2. Think about the future
To save gas, be strategic about using your car. Lynch suggests, if you have to run errands, do them in one trip and at a time when there isn’t a lot of traffic.
When you’re grocery shopping, be armed with a meal plan for the week that already exists.
“It helps people save money if they know what they are going to eat and stick to it,” Lynch said.
Pierce loves apps like Flipp to look up grocery store ads. You create a meal plan for the week that includes items for sale and prepares three of those meals on Sunday. Having a plan for the remaining days of the week helps her avoid eating junk food or junk food.
“This strategy has helped my family save hundreds of dollars during our debt-free journey, the pandemic and now in times of high inflation,” Pierce said.
3. Shop carefully
If you don’t need a specific brand’s item, you can save money at a discount grocery store. Buying items in bulk at a warehouse store, such as Costco or BJ, may help you avoid price hikes in the future.
For a store comparison, look at the product’s unit price, which basically represents the unit cost of a particular product. For example, canned goods may be priced per ounce and paper goods may be priced by paper or by foot. So, while the product may seem cheaper at first, it may not be the best deal because it contains fewer units than the higher priced item.
Use coupons in-store and online. You can get it as part of a retailer rewards program or a credit card. Meanwhile, browser extensions like Rakuten and Honey automatically look up and apply coupon codes at checkout when shopping online.
4. Don’t accumulate credit card debt
It can be tempting to weather the storm by accumulating credit card debt. Don’t do that, said Dawit Kebede, chief economist at the National Credit Union Association.
Credit card interest rates are already high, coming in at 16.26% on average, according to CreditCards.com. It is expected to rise as the Federal Reserve continues to raise interest rates this year to help contain inflation.