Tag: dealing with inflation

Do you feel like your money is not stretching as far as it did a few years ago? When you come home from the grocery store, do you feel like you have fewer bags of groceries, but your bill is the same or higher? At this stage in our lives, my husband shops for our groceries. Last week, he came home without some items I had written on our list. A few products were out of stock since the supply chain continues to struggle, and other items were priced higher than we felt was reasonable to pay. For example, my favorite salad dressing had doubled in price to $6 a bottle, and the sirloin I needed for pepper steak was more than $12 a pound. So, we found the salad dressing at a lower price at a different store and chose a recipe that used cheaper meat.

Despite the good news of a recent slowdown in the inflation rate, grocery prices continue to rise faster than the paycheck of the average American. Last week, the Bureau of Labor Statistics reported the inflation rate for June was 3.0%, the lowest rate in more than two years. Unfortunately, this 3% price increase since June 2022 is on top of the 9.1% increase from the previous twelve months, so most consumers are paying 12% more for the same goods than they were two years ago, while salaries have risen only about 9.5%.

Grocery prices have risen more than the average consumer product. In fact, over the past two years, groceries have increased nearly 20%, requiring a more significant chunk of your budget.   Here’s an example:

• In 2021, if you were making an “average” income of $57,000, you were taking home an average monthly check of $3,700.
• The ideal food budget is 12% of your monthly take-home pay or $444.
• If your income has increased only by an average of 9.5% to $62,415 and your take-home pay is now $4,051, then to buy the same “basket” of groceries today that you did in 2021, you would pay $533 per month.
• Groceries are now consuming $533/$4051 = 13.2% of your budget.
• A 1.2% increase might not seem like a big deal, but it will require you to cut $49 from other areas of your budget. It would be best to be mindful when shopping for the best deals on your non-food purchases.

Rent and fuel have also increased significantly. Rent has increased an average of about 15% over the past two years, and gasoline prices where I live have increased by about 17%. These increases are reducing the purchasing power of most Americans. Consumers are adjusting their spending and shopping habits to combat the impact of inflation.

Here are some tips to help you manage your budget as inflation grows faster than wages.

• Check grocery ads to determine what is on sale and where to get the best prices before you plan your meals. Plan meals around what is available and affordable.Go to multiple grocery stores to get the best deals on the food you want.
• Stick to your lists, and don’t be distracted by great deals on items you won’t use before they expire. Avoid extreme loyalty to particular brands. Be willing to try other brands and generic items to get better prices.
• Combine grocery store trips with other errands to minimize gas consumption.
• Use credit cards wisely if you use them for grocery and gasoline purchases. Always pay your balance in full each month. Use a card that gives you cash back. Sign up for monthly or quarterly “extra” cash-back bonuses. Make a grocery list and stick to it to avoid overspending often associated with using credit cards.
• Research before making a purchase.  Use the Internet and digital tools to help you find the best prices for items you need. Google Shopping, Price.com, and other online portals will compare prices on various items to help you find the best deals. For an evaluation of some of these tools, see https://www.moneycrashers.com/best-price-comparison-shopping-engine-sites/ or https://influencermarketinghub.com/best-price-comparison-sites/
• Shop through portals that give you cash back for shopping. Sign into a shopping portal and purchase from the companies they have relationships with. Receive a portion of the sale as cash back. The percentages are typically less than 10%. This option is similar to a discount, except you must wait for the cash back. These sites can be beneficial as they also search out the best prices. They are most helpful if you are not loyal to a particular brand and if you will buy the best deal rather than the brand-name item.

It seems as if the rapid inflation of the past two years is behind us, at least for the time being. However, it will take years for wages and salaries to catch up. Take this time to review your budget and make adjustments based on your current spending for food and other necessities. You may need to reduce discretionary spending until your earnings match the new price levels.

For other guidance on balancing your budget and managing your money, my book Honoring God with Your Money is an excellent resource. If you would like a free budget worksheet incorporating ideal spending guidelines, please email me at Susan.ball5@aol.com, and I will happily email them to you.