7 ways to make inflation hurt less
With inflation at a 40-year high, everything from gas prices to groceries to utilities costs more than it did a year ago. The situation, exacerbated by a global supply chain shortage and ongoing pandemic, is unlikely to stabilize anytime soon. The rising cost of living is the norm, and unless adjustments are made, the average American will continue to struggle in this economic downturn.
While lawmakers work on policies to alleviate inflation, ordinary people can do their part to keep their expenses reasonable. Here are seven ways to fight inflation.
Check your personal inflation rate
The first step in fighting inflation is determining your personal inflation rate. This way, you can figure out where the majority of your spending goes, and set a game plan for bringing these expenses down.
According to the Consumer Price Index, gas prices are up nearly 60%, utilities have increased by an average of 22% and groceries cost almost more than 10% more than they did a year ago. The average American family is spending hundreds of dollars more per month on essential purchases than it did last year.
The exact number will vary by household and location, so it’s crucial to determine your own personal inflation rate. Doing so can help you figure out where your most significant expense hikes are so you can try to bring those costs down.
To determine your personal inflation rate, you’ll want to get out your credit card statements and compare your spending from 2021 and 2022 in the following categories:
Groceries
Gas
Dining
Communications (phone, internet, streaming)
Entertainment
Retail
If that sounds tedious, you can get this information through a spending tracking tool like Mint. Head over to the transactions tab, click on the “category” dropdown and select the category and date range you want to tally up spending for. Doing this for both 2021 and 2022 to determine your personal inflation rate can help you readjust your budget and keep expenses more manageable.
Ask for a raise
The Great Resignation has spawned a worker shortage in virtually every industry. Everyone from tech giants to fast food restaurants is struggling with staffing its workforce. Companies are offering hiring incentives to bring new employees on board. This is a great time to negotiate your salary and maybe pursue other career opportunities if your current employer won’t abide by your request for a raise.
While a 2-3% annual raise is standard, the job market is more competitive than ever. Taking rising inflation into account, you should try to negotiate a salary that helps you maintain your standard of living without massive budget changes.
Invest
As if rising prices weren’t enough of an issue, the stock market took a substantial hit this year. The S&P 500 is down 20% since January, and experts predict we are now nearing a bear market. If you have the funds to invest in stocks or index funds, now might be the time to do so. If the stock market rebounds, your gains could far outpace the current inflation rate.
The stock market has traditionally outperformed inflation. With the recent downturn, there might be even more opportunities to grow your investments far beyond the current 9.1% inflation rate.
Research cash-back cards
Cash-back cards are an excellent way to reduce expenses as living expenses rise. You can get as much as 6% cash back on everyday purchases with the right credit cards. In fact, with the right credit card sign-up bonus, you can earn a cash-back bonus of $200 or more for putting these purchases on your card.
Chase Sapphire Preferred: Earn 80,000 bonus points after you spend $4,000 in the first three months from account opening. The 80,000-point welcome bonus is worth $800 when redeemed for cash back.
Blue Cash Preferred Card: Earn a $300 statement credit after you spend $3,000 within the first six months.
Capital One Savor: Earn $300 cash bonus when you spend $3,000 within three months from account opening.
Chase Freedom Unlimited: Earn $200 bonus after spending $500 in the first three months from account opening.
Chase Freedom Flex Credit Card: Earn a $200 bonus after you spend $500 in the first three months from account opening.
Shop through portals
Shopping portals are websites that reward shoppers with bonuses, like miles, points or cash back, for making online purchases through specific merchants. Whether you’re buying groceries, clothes or essentials for your home, you can save around 5-10% on your purchases using a cash-back portal. On special occasions, you can get upward of 100% of your purchase cost back at some retailers.
For the best rates, head to a shopping portal aggregator like Cashback Monitor, and search for the retailer you want to shop with. You’ll get a list of shopping portal rates, broken down by points and cash back. Some would argue that points and miles are more valuable than cash back. This may be true if you’re using them for first-class travel, but if you just want to keep your bills low, cash back is the way to go.
You can install portals like Rakuten directly into your browser, and the extension will notify you when certain shops are offering rewards.
At the moment, you can get 100% back on various VPN services, 20% back on certain contact lens orders, 15% on pet supplies at Chewy, 10% at Nordstrom Rack and more. With virtually everything going up in price, cash-back portals offer an easy way to reduce expenses.
Investigate shopping apps
Shopping apps are a great way to supplement cash back from credit cards and shopping portals. Every major retailer has a shopping app that offers coupon codes and savings on everyday purchases. Apps like Dosh let you link credit cards and get rewarded for every purchase at participating retailers. For example, you can get $75 back on an AT&T Fiber package, 6% back at Home Depot and 3% at Safeway.
Additionally, you can save money on shopping club memberships. Dosh is offering 15% back on Sam’s Club memberships and $20 with Costco.
You can stack on your savings by simultaneously using Dosh, shopping portals and a cash-back card. If you have an American Express Card, you might be able to generate additional savings through Amex Offers, Chase Offers or Citi Merchant Offers. Over the past year, I saved over $700 through Amex Offers. Deals included discounts on my cell phone bill and car insurance premium as well as dining credits and discounts at retailers. All of these were essential purchases I made that I managed to save significantly on, thanks to rebates offered through Amex.
Try extreme couponing
Between the global supply chain storage and inflation, groceries are one of the most significant expenses Americans are contending with. It’s an essential spending category that is putting a serious dent in most people’s budgets. This is where extreme couponing can help alleviate financial stress.
Extreme couponing was popularized a decade ago by the eponymous TV show on TLC. It involves using coupons strategically to bring down the cost of groceries by as much as 100%. The aforementioned shopping portals and apps are a great starting point for extreme couponing, but they’re not the only option. You can stack on additional savings by joining grocery store rewards programs and coupon sites like coupons.com and Valpak.
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