From NPR to The New York Times and The Wall Street Journal, the hot topic of discussion this week has been skyrocketing inflation in the United States.
In case you missed the headlines, or were too busy working overtime to pay for the increasing costs on everything from food and gas to rent and restaurant tabs, here are the key takeaways regarding consumer prices in this country at the moment:
The Consumer Price Index climbed 5.4% in September from a year earlier. That's the largest increase since July 2008.
Between August and September, U.S. consumer prices spiked 0.4%.
The hardest-hit costs include new cars, food, energy, gas, and restaurant meals.
Higher prices are also rapidly outpacing any pay increases workers have been able to secure.
Prices are not done increasing yet. Experts say they are likely to rise further over the coming months.
Drazen / Getty Images Drazen
So, what's behind the skyrocketing prices? A variety of issues—ranging from factory shutdowns in Asia linked to COVID-19 to slowed U.S. port operations that have left ships loaded with consumer goods waiting to dock and unload. Making matters worse, a Bankrate survey found that 89% of adults have noticed rising prices—and 66% of those people say the prices have negatively impacted their financial situation.
"The inflation situation is getting worse on Main Street, unfortunately, because everyday categories like food, housing, and gas are spiking," says Tedd Rossman, Bankrate's senior industry analyst. "Not long ago, the most notable gains were on things like used cars, lumber, and travel, which while still significant, are not purchases people make every day."
For those struggling to cope with the cost-of-living increases, we've got tips from a variety of money and economic experts about how to recalibrate your household budget and finances.
To help keep your household spending somewhat intact at a time when prices are on the rise, map out what purchases are immediately necessary versus those that can wait a few months. Do you really need that new television right now? Or is it more of a "nice to have but not essential"? If the latter's the case, put the purchase on the back burner for the time being.
"While we are currently in a state of inflation, the costs of goods and services will not always be more expensive," says Clay Ernst, executive director of financial planning at Edelman Financial Engines.
"Delaying big-ticket purchases comes down to your specific financial situation and your goals for the future. If you find yourself in a place where you are exceeding your monthly budgets, wait it out until the item is possibly cheaper in the future," adds Ernst. "Postponing all large purchases, that aren't immediately necessary, is a smart way to prioritize your finances for the time being."
Opt for renewed or refurbished alternatives
Many online retailers—from Apple to Amazon—offer certified refurbished products on their websites, which allow you to purchase "like new" late-model products for 10% to 40% discounts, says Ernst. "Every year, thousands of brand-new products get returned to online retailers for reasons ranging from the wrong color to incorrect size," Ernst explains. "These products are often immediately repackaged and made available at heavily discounted prices, and most importantly, come with the same warranty as the original new product."
Another great resource to get in the habit of checking is eBay, where you can often find new and open-box products available for resale at heavily discounted prices.
Compare prices or switch providers
So many times, we're spending more on services and household bills just because we don't realize there's a cheaper option out there, says budget lifestyle expert Andrea Woroch.
"For instance, if you haven't checked the price of your auto insurance policy in a few years, you may be missing out on big savings," she explains. "Run a quick search through insurance comparison sites like TheZebra.com, where you can gather quotes quickly. As an added bonus, this particular site won't sell your information, so you won't get bombarded with offers. Meaning it's pretty harmless to do some comparison shopping."
Zebra claims it saves the average user more than $900 on auto insurance on average, and that extra savings can be used in other areas.
Use cash-back credit cards for everyday purchases and expenses
You know those purchases you make day in and day out? The ones you cannot avoid, such as food and gas? You should aim to earn money back on these essential expenditures, especially amid rising inflation. You can do this in a variety of ways, including by using a cash-back credit card. The key here is to use the credit card to make the purchase and then immediately transfer money to the card to pay for whatever you just bought (thus not getting yourself into debt when adopting this approach).
"Then, rewards can serve as a nice return on everyday spending," explains Rossman. "A 2% no-annual-fee cash-back card like the Wells Fargo Active Cash Card or the Citi Double Cash Card can put money back in your pocket in exchange for purchases you would have made anyway."
You might also consider doubling your rewards by shopping through cash-back apps and online portals such as Rakuten, TopCashBack, or Ibotta, which pay you for online purchases made with partner retailers. Many of these same platforms, when installed as a browser extension on your computer, will also search for coupons for any items you put in your basket while shopping online.
"Use technology to your advantage," says Rossman of the browser extensions. "These are pretty easy ways to help you find the best bargains."
Review your budget and daily and weekly receipts
In addition to all the behavioral changes you can make with regard to shopping, this is also a good time to sit down and review your overall budget.
"Whether it's a budgeting app, or good old pen and paper, the best way to get control of rising costs is to know where you are now," advises Mark Schrader, financial planning strategist for TIAA. "If you can find a budget line item to cut, like a subscription service you're no longer using, any dollars not spent in one category can be shifted to another category."
When you're putting together that monthly budget, it's important to factor in how prices have risen for the products you're purchasing consistently. Get in the habit of closely reviewing the receipts for your routine spending.
"For instance, keep a close eye on your receipts from your weekly trips to the supermarket to help monitor your spending, and cut unnecessary costs," suggests Ernst, of Edelman Financial Engines. "By managing these smaller, daily expenses, you can better inform your overall spending plan and household budget. Tracking will also allow you to make informed decisions on the best purchases and where you might be able to cut back."
Planning ahead is the heart of what financial advisors do for a living. And it's time for you to adopt similar habits in order to get a handle on inflation.
"I work with clients all the time by listening to their financial goals and building a work-back plan to help them reach those goals. You can apply this same approach to your own daily tasks," says Ernst. "For example, take a simple trip to the grocery store. Rather than walking up and down the aisles filling your cart with nonessential items, plan out what you need ahead of time. A grocery list is a perfect way to ensure that you buy what you need, minimize overspending, and as an added perk, cut down on food waste."
At a time when food prices, in particular, are at a record high, planning out your ingredients in advance can be a smart way to help stay on track. Small, simple spending decisions and changes you make will have a trickle-down effect on your overall financial well-being and have an impact on the bigger picture over time says, Ernst. You might also try growing some of your own food at home to help further reduce costs.
Rethink those recurring subscriptions
Take the time to review any recurring subscription charges on your credit cards. While these expenses may seem like small fees each month (yes, we're talking about that $8.99 for a streaming service), you may realize you're not binging on Netflix the same way you used to, and the expense is no longer justified.
"You can also seek out package or family deals on expenses like this to minimize these monthly costs, like bundling Hulu with a free Spotify subscription," says Ernst. "These small changes can help offset the impact of inflation on your monthly budget."
A recent survey from J.D. Power found that Americans upped their streaming video subscriptions to $47 per month. In other words, it just may be time to ask yourself this question: Do you really need that many options? And now that the kids are back in school, and you're out and about more, are you really (be honest) spending all that much time at home watching these things anymore?
Your streaming entertainment subscriptions are not the only recurring expenses you may want to take a critical eye to in order to save money each month.
"If you're paying for too much data, move to a lower-tiered and cheaper plan and then just get in the habit of tracking your data usage," advises Woroch. "And get in the habit of connecting to Wi-Fi at work or when you're home."
Continue your COVID approach to money
During the height of the pandemic, one of the most striking changes that took place across this country was that many of us learned to live differently. This materialized in a variety of ways, including not going out to eat as much, doing less driving, and spending less on entertainment beyond the home. Schrader suggests continuing some of these habits amid the current inflation-ridden environment.
"We can use a lot of the lessons from Covid to keep our costs down as life returns to normal," explains Schrader. "Continue meal planning at home, and shopping intentionally with costs in mind. If you're returning to work, it may make sense to bring your lunches until you get a sense of where prices are."
Simply ask for a discount
This is a habit we should all adopt, whether there is inflation or not: Get in the habit of politely negotiating prices whenever you can. Many local brick-and-mortar stores are especially eager for your business and may be willing to offer a lower price.
"This is an especially common practice overseas, and increasingly accepted here in our country. Store managers are often empowered with some flexibility to offer discounts, but you'll likely only know if you ask," says Ernst.
Ask for a raise at least once a year
Finally, one of the best ways to combat inflation is to make sure your income grows at or above the rate of inflation.
"Make sure you have a conversation with your boss at least once per year, if not more, on how to continue increasing your salary each year," advises certified financial planner Pamela Capalad, founder and CEO of Brunch & Budget.
Let's all say it together: It's not over until it's over. And until this pandemic is truly behind us and life returns to something a bit closer to normal, you can expect that there will be hiccups and challenges throughout the economy, sometimes in places you hadn't thought of or perhaps least expected. The current Consumer Price Index spike appears poised to contribute to some of those future challenges.
"So much economic activity is driven by consumer spending. If people are spending more on rent, gas, and groceries, they may have less left over to eat at restaurants, buy Christmas presents, and go on trips," says Rossman, of Bankrate.
In other words, the pain associated with the current round of price increases will likely be felt for months to come.