US inflation rose to a mighty 7% by the end of 2021, signifying a record high since the summer of 1982. As a rise in inflation represents a rise in prices, many consumers have struggled to adjust to a new normal of an even pricier life.
These rates are revealed through the Personal Consumption Expenditures Price Index, which measures prices in the US, and is the preferred method of the Federal Reserve.
With prices so high, it is important to stop and think about how to get by, and even save, during such expensive periods.
Watch Your Spending
With a bit of luck, your employer will adjust your salary to reflect the rise in inflation, which would mean that - in theory - your spending does not need to change.
However, should this not be the case, it is important to watch your spending to ensure that you are living within your means. With the average American household spending $550 per month on food alone, it is important to adjust to rising prices. One key area to save money in is travel. With gas prices sitting at around $3.725 per gallon, driving is pricey, and it all adds up!
There are numerous ways to track your spending. You could download a budgeting app such as Mint, which helps you track your spending, track splurging, and change your habits. Many of these apps are free to use, and can be your best friend when trying to alter your spending behavior. If this doesn’t sound right for you, you could create a manual budget. Here, you measure your incomings versus your outgoings, and try to rejig your spending to lower it.
Borrow In The Right Way
With 12 million Americans making use of payday loans each year, and around 253 million Americans using credit cards, borrowing is a notable feature of American financial habits.
While borrowing can be a lifeline, it can also be expensive. With payday loans, APR sits at around 400%, depending on your personal situation and where you live. If you are trying to tone down your spending, or lower the cost of borrowing, it may be in your interest to sign up for a new credit card. This may grant you access to a 0% interest trial, meaning that you can borrow money with no added cost. Alternatively, you could join a credit union. These non-profit institutions provide small loans at lower rates than high street providers.
Invest In The Right Places
Investing can be tricky, but it can also be rewarding. With prices rising, it is in your interest - as always - to reap the benefits of saving. You should look into savings accounts with strong interest rates. This interest rate represents how much profit you will make on your savings.
The national average interest rate on savings is 0.06%. You should shop around online, and utilize comparison websites to understand which savings accounts offer the best rates.
Additionally, before investing your money anywhere, you should ensure that the institution is regulated and legitimate. With fraud on the rise, you should be cautious of losing any money, and ask the institution for proof of regulation. You can also cross-check their details here.