How to Budget for Inflation: 5 Ways to Adjust Your Living Costs

Inflation has changed our personal budget. If you want to know how to budget for inflation, you need to remember that you cannot keep the same budget you have now. You'll need to look at the previous months. I look at it and tweak it.

First, if you are not on a written budget… get on a written budget!

Remember, budgets are NOT constricting but instead give you FREEDOM to be in control of your money, rather than your money in CONTROL OF YOU!

You must be careful not to copy, copy, copy, copy. Because two years will have gone by, and if you're using the same budget with the same numbers as you were, you will be in the red.

Inflation will have caused so many of the budget categories to have grown, so you need to budget for inflation in those categories.

I recommend doing a spending analysis to see, or if you're already budgeting, look back at past budgets and figure out how much you've spent on groceries, gas, and eating out in the past six months. See how your budget has changed and adjust accordingly.

You want to ensure that you're not going into the red because if you just let your budget coast, it will go into the red without even realizing it because of inflation. This may mean you need to spend less money on savings, debt, or investments.

1. Housing

The first budget category that we have seen affected by inflation is housing. We own our home; we don't rent. Some friends have gotten notices on their front door saying their rent is going up $1,000 a month within 90 days. That's an extreme example, but even as homeowners, we are seeing a massive increase in homeowners insurance, electric costs, and water bills. Prepare for inflation later with savings now.

How to save money on groceries

2. Groceries

Next up is groceries. On average, we were spending about $60 to $75 a week for groceries at Aldi. Now we're spending about $100 a week. That is a big hit. That does not include formula for my daughter. Formula is through the roof. It has more than doubled in price.

Because of this, we've returned to simpler, easy meals. We've gone back to eating from the pantry, cleaning up the freezer, and seeing what we can do to make our meals stretch. We can add rice to them, go meatless on a day, or do different things to make our grocery budget stretch a little bit further.

We are also shopping at places like Aldi or Walmart versus Publix, which is expensive. Whole Foods is costly. Shopping at places like Aldi, Trader Joe's, and Walmart will save you a lot of money.

How to save money on gas

3. Gas

Another category hit by inflation is gas. We have seen a huge increase in the price of gas. The way that we combat it is we use apps like 

GetUpside. We're able to get cashback for our gas, so we're getting about twenty cents per gallon cashback with Upside, which is amazing. You can also earn cashback on restaurants, and they will also start adding grocery stores. 

The same applies to Fetch Rewards. If you're already going to buy groceries, you can get cash back or gift cards.

You can also double dip. So if you get your gas receipt, you can upload it into Fetch Rewards, earn 25 points, and use your cash back on GetUpside. So double dip with your receipts and use them in multiple apps. You can't use the same receipt multiple times, but you can use it in multiple different apps.

4. Cars

Times have changed with purchasing a car. Car prices have been seriously affected by inflation. We recently went to a dealership and bought a Kia Stinger. There is no negotiation anymore.

Now dealers are like, you don't want this deal, okay, good luck finding it at another dealership, and they're right. They are in control, and you're paying over MSRP (Manufacturer Suggested Retail Price). I never thought I'd be paying over MSRP, but that's the car market now. It may pay you to wait to get a new car until prices drop.

GetUpside and Fetch Rewards apps

5. Restaurants 

The next budget category we've seen a significant increase in is eating out at restaurants. Prices of our favorite dishes have increased a lot. Our grocery prices are rising, so restaurants' food costs are growing. Inflation is hitting restaurants as well.

Use apps like GetUpside that have cash back on a lot of restaurants, so use that app. 

So what can we do about inflation? We can stay on top of our budget and make sure that we're tracking every single expense. Also, track throughout the month so you don't get to the end of the month and realize you blew your budget.

You can do all your errands on the same day, so you're not wasting gas. Shop in the pantry and eat at home. That is a big way to stay on track; if you see halfway through the month that you're overspending, you can cut back. 

Another way is to increase your income. Look for ideas for making more and making money from home. Pick up a side hustle. 

How to budget for inflation

By being proactive, you can budget for inflation and adjust your spending. You can also learn ways to make more money to make up for the extra expenses you have with inflation. Track your budget often to avoid overspending, and you can get ahead of inflation.

Kelly Anne Smith | Freedom In A Budget
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