If you had a nickel for every time “inflation” is mentioned in a day’s news cycle, you might be able to offset some of its effects in about a month! (Well, ok. That may be a gross exaggeration but wouldn’t that be nice?)
In this post, we’re going to take a hard look at this beast called inflation and give you four proven ways to tame it. Let’s start with a simple definition of inflation and how it affects you. Inflation is the rate at which the cost of goods and services rise. What it feels like to you – you spend more to get less. And when you tighten the budgetary belt to account for rising prices, you’re essentially lowering your standard of living. (NerdWallet does a deep dive into inflation if you want to have a better understanding of terms you’re likely to hear such as Consumer Price Index.)
Inflation can affect you differently depending on your lifestyle. If you’re lucky, you don’t make expenditures in the categories heaviest affected by inflation. But if you need to find ways to offset inflation, read on for some solid tips.
Take time to evaluate your current banking relationships. Look at your most recent account statements. Are you paying any monthly fees just for having a checking account? Are you getting charged for overdrafts? Now more than ever, it pays to switch to a bank or credit union that doesn’t charge you for checking or require high balances to have fees waived.
Credit cards are another source of oft-forgotten fees. Many come with annual fees that make you pay for the privilege of just having the card. A review of your cards can help you decide if it’s worth it or not to pay that yearly fee. Some other card fees are in your control, such as a late payment fee. Do everything you can to avoid incurring this fee. Not only is it costing you money, but it’s also affecting your credit score, which in turn can affect your ability to get a better loan rate in the future.
At PSECU, we don’t believe in paying to use your own money, so we offer free checking as well as credit cards with no annual fees.
In inflationary times, it’s crucial to understand exactly how your money flows in and out of your bank account. A budget helps provide clarity. In your review, you’re looking for any place where you can save money to replace what inflation is taking away. Canceling unused streaming services is a quick way to return money to your budget. For more ideas, check out our post 5 Top Money-Saving Life Hacks. Another way to find extra cash is by reducing your debt, which we’ll cover next.
Here, you want to either eliminate debt or pay less for it. Depending on your situation, you can take steps to do both. For example, if you have multiple credit card balances, each with a different interest rate, you could save money by transferring the higher interest balances to a card with a lower interest rate. Be careful, though, to make sure you understand if there is a cost for doing this. Balance transfer fees can be a percentage of the amount being transferred. At PSECU, we do not charge a balance transfer fee.
Refinancing loans can also reap savings on your monthly payments. Auto loans, home loans, and even student loans are worth evaluating. A caution about student loans: be sure you fully understand the terms of your loan. Some student loans have restrictions where refinancing is concerned. Check out this NerdWallet post about refinancing student loans.
You’ll save a ton of money by not shelling out to replace items you can easily maintain yourself. Think about appliances like washers and dryers. You might be able to watch a YouTube video to see how to replace a $15 part on an appliance that would cost several hundred dollars brand new. This maintenance idea also holds true for you. The old adage that an ounce of prevention is worth a pound of cure takes on added importance when inflation is battering your bank account. Keep up with your regular checkups, and don’t neglect a potential medical problem because you don’t want to spend the money to have it checked out.
If there is any silver lining to inflation, it might be that economic policies often shift to encourage saving. Watch for rising savings rates and if you can, take advantage of them. Two popular savings instruments are certificates of deposits (we call them certificates) and money market accounts. Learn more about what we offer here. For more general money management tips, visit our WalletWorks page.