Protecting Your Budget from Inflation: Cutting Costs
Well, folks, we made it to our fourth and final installment of this month’s series on inflation. Today, I’ll touch on ways you can cut costs to maximize the longevity of each dollar you earn. Reducing your expenses can also free up money that you can use to offset the effects of inflation. Here are some tips to help you cut costs and stretch those dollars:
1. Review Your Budget: The first step in cutting costs is to review your budget. Look at your expenses and identify areas where you can make cuts. For example, you may be able to reduce your spending on entertainment, dining out, or subscriptions. In other industries, this is often called “Value-Engineering,” so take some time and value-engineer that budget. You’ll be surprised how much money you can “find.”
2. Shop Around for Deals: Another way to cut costs is to shop around for deals. Compare prices from different retailers and providers to find the best deals on products and services you need. You can also use coupons and promo codes to save money on purchases. There are even apps that can help you find the cheapest gas or earn cashback on purchases simply by uploading your receipts.
3. Reduce Energy Consumption: Energy costs can be significant for households and businesses. Reducing your energy consumption can lower your energy bills and save you money. Simple measures like turning off lights when not in use, using energy-efficient appliances, and adjusting your thermostat can help you reduce your energy consumption. Did you know that the appliances that you leave plugged in while not in use still consume electricity? Unplug and save some money!
4. Cut Your Transportation Costs: Transportation costs can also be significant. Look for ways to reduce your transportation costs, such as carpooling, using public transportation, or walking or biking instead of driving. You may even consider asking your employer to allow you to work from home a few days each week.
5. Evaluate Your Insurance Coverage: Insurance is an essential expense, but you may be able to reduce your insurance costs by evaluating your coverage. Make sure you are not over-insured or under-insured and consider raising your deductibles to lower your premiums. Remember, if you haven’t asked your advisor to review your insurance coverage, your financial plan is incomplete! Insurance is a large component of a comprehensive date-specific dollar-specific financial plan.
6. Buy Generic Products: Generic products are often cheaper than name-brand products and can be just as good. Look for generic products when shopping for groceries, household goods, and other products. And remember what you do with toilet paper to help keep you headed toward the generic! After all, it doesn’t matter all that much, does it?
7. Avoid Impulse Purchases: Impulse purchases can quickly add up and impact your budget. Before making a purchase, take some time to think about whether you really need the item and whether it fits into your budget. Maybe that amazing new putter is more of a want than a need.
This month, we learned a lot about inflation and how it can affect your budget, savings, and investments. However, my hope is that you learned equally as much about ways to counteract the negative effects of inflation. If you have additional questions or if you’d like to discuss specific ways to im[plement these ideas in your own financial plan, I encourage you to reach out.
Until next time…
One last thought, I believe an educated investor is an empowered investor. If you like what you’ve read and think your friends and family can benefit as well, please share.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested in directly.
All investing involves risk, including loss of principal. No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Dollar-cost averaging involves continuous investment in securities regardless of fluctuation in the price levels of such securities. An investor should consider their ability to continue purchasing through fluctuating price levels. Such a plan does not assure a profit and does not protect against loss in declining markets.