As inflation impacts the cost of living across the country, it’s no secret that many people are tightening their wallets to make their paychecks stretch. Housing, groceries, and even car financing options are significantly more expensive, leading to less cash available each month for basic necessities.
Before turning to loans or your credit card to make ends meet, it’s important to explore all of your options so that you can be as financially stable as possible in the event of a recession. Living with inflation means learning the smartest budgeting and life hacks to get the most bang for your buck! Be frugal, be smart, and make your money stretch a little bit more this month by following the hacks listed below.
Use Zero-Based Budgeting or The 50/30/20 Rule
If you don’t have a budget in place already, now is the time to create one. The smartest hack to make your money stretch is to have a plan for how to spend or save it each month. It’s practically impossible to manage your money without a budget! But before you get started, you need to have a better idea of the type of budget you want to use.
There is no one-size-fits-all approach to budgeting, and some strategies can work better than others. Some of the most popular methods for budgeting are zero-based budgeting and the 5/30/20 rule budgets. With zero-based budgeting, every single dollar is accounted for each month. The goal of zero-based budgeting is that your total monthly income minus your total expenses equals zero, hence the name. One of the selling points of this method is intentionality and control over spending, because it means nothing is left unaccounted for and you have a true plan for your month. Your money can go towards saving, investing, paying off debt, and even entertainment as long as you have a plan for it in your budget, it is spent and accounted for!
In contrast, the 50/30/20 rule is a simpler guideline that divides your after-tax income (not your gross income) into three broad categories: 50% for needs, 30% for wants, and 20% for savings or paying off your debt obligations such as credit cards, payday loans and student loans. It’s an ideal option for individuals who need a more flexible and less granular approach to budgeting. Your needs and wants can change, so there is flexibility in that regard! You don’t have to always make sure there is an exact plan for where your money is going each month, but with the 50/30/20 method, you have a better idea of what your spending habits look like and how much of your income is going straight into your savings account.
Beyond these two popular methods to budget your money, there are other budgeting methods such as envelope budgeting, where cash is physically divided into envelopes for specific expenses, and letter budgeting, where letters (like “A” for absolute necessities, “B” for beneficial expenses, and so on) are used to prioritize spending categories. Each budgeting style offers different levels of detail and discipline, making it important to choose the one that best fits your financial goals and habits.
Update your Budget Monthly
Every month, it is important to go through your bank and credit card statements. If needed, try to reevaluate your budget and see how your spending habits align with your current plan and goals. If you’re consistently overspending in a certain area of your budget, such as transportation, it may be time to consider cutting back on trips to Target to save on gas. Additionally, consider riding to work with your coworker to cut down on gas costs throughout the month!
Your monthly goal should be to review your budgeting plan and review your fixed and variable expenses. Fixed expenses will not change throughout the month (think rent, car loan, etc.), but variable expenses (groceries, utilities) often change, so make sure that you are not paying too much for food or using up too much electricity!
Bulk Buying + Meal Prepping To Fight Grocery Inflation
The cost of food is up 2% according to recent data sourced by the Bureau of Labor Statistics. If you felt your grocery bill rising over the past few months, you are not alone. One of the smartest ways to fight grocery inflation is to buy non-perishable items in bulk at Costco or another wholesale grocery store to save on sales tax and get some headway on the prices increasing. If you can, try to buy food when it’s in season and meal prep as much as possible to avoid ordering takeout when you have no groceries in the fridge.
Try out a few different recipes to get started and make sure to keep it creative! You don’t want to eat the same thing every week, as you’ll start to get bored, and you may end up spending more money on fast food if you don’t eat your prepped lunch.
Negotiate Recurring Bills (Internet, Insurance, Subscriptions) Wherever Possible
Did your internet bill or car insurance just increase? You’re not alone – but you may not have known that you can negotiate your bill! For example, if your car insurance goes up, you can call your provider directly and let them know you’re thinking about switching. You may be able to get a cheaper plan just by communicating with them! The same hack also works for your internet bill in some cases. It can’t hurt to give them a call and try!
Get Coupons When You Can
Some grocery stores offer apps with built-in coupon codes that you can scan in-store to save money! Simply use the app to search for food on sale that day and try to plan your meals around the food you end up buying. Pro tip- make sure to check the expiration dates on discounted food you buy, especially if it’s meat! You may only have a few days to use the food you prepped.
Re-Evaluate Wants Vs Needs
Another hack if you are trying to save money is to simply cut back on your budget and reevaluate your wants versus needs throughout the month. While we all want to have multiple subscriptions to watch our favorite shows, it may not be a realistic option if we need extra money to pay for groceries or other necessary expenses.
Community Resources (Co-Ops, Discount Stores, Local Programs)
Co-op stores can be the best tool in your toolkit if you need to save money. These stores are community-focused and often have discounted food, clothes, and hygiene items, so you aren’t paying full price for the stuff you need to last this month.
Other discount stores, like thrift stores, can help you handle everything from replacing shoes to decorating your apartment. There’s no shame in shopping at a thrift store or heading on down to your local food bank to get free food! It’s important to use every resource at your disposal if you want to smartly survive inflation and make the most out of your money.
