When I first thought about this blog, I was thinking about strategies to save. When I started typing, my mind went from strategies to save, to strategies to adjust for inflation.
Inflation is the price change of goods over a period of time. In other words, when you bought a gallon of milk a year ago, does it cost the same today? Compared to last year, the price of goods has increased 4.4%, a 30 year high. The typical inflation rate runs about 2%. This means that your salary needs to increase at the same rate to keep a balanced budget. Unfortunately, that usually does not happen which means we need to cut expenses or seek additional income.
Since my title is Small Savings, let’s focus on sharing some small ideas to cut expenses. Reflecting on your habits is a good place to start. Many of us buy coffee, so let’s start there. If your coffee cost between $2-$5 and you buy one every day, that will cost you between $730-$1,825 a year. How about eating out? If we spend $42 eating out every week, that totals $2,190. As you can see, small changes can save a lot of money over the course of a year. Reflect on your habits and make changes that lead to small savings.
High inflation is likely to continue for the coming months. This means we need to adjust our financial behaviors to insure the money we make (income) remains in line with the money that goes out (expenses). If you have a budget, great, but be sure to monitor it for changes. If you don’t have a budget, the Consumer Financial Projection Bureau has some great resources.