Inflation is at the top of everyone’s minds right now. Coming out of the Covid-19 pandemic, we have seen supply-chain issues, as well as rising consumer demand. The conflict with Russia invading Ukraine has made tensions worse across the globe and inflation fears have continued to grow for many.
Inflation can be felt in our day-to-day lives from gas prices, food, travel, housing, and much more. While we can’t personally change inflation, we can focus on different ways to save money throughout the year. We’ll discuss what is causing inflation and how to save money with our personal finance tips that you can take to help deal with inflation.
What is causing inflation?
To put it simply, inflation is a measure of the rate that goods and services are rising in the economy. Inflation can occur nearly everywhere, from basic daily needs and services such as food and housing, and also in luxury goods, such as cosmetics, vehicles, and more.1 When inflation is rising, it can make consumers’ purchasing power less valuable. If the inflation rate in a given year was 5% and your yearly salary increase was only 3%, you would have less purchasing power in the next year.
So, what exactly causes inflation? There are a variety of factors that can play into the inflation rate rising, but we’ll break down a few here.
Supply and demand
When consumers want to spend more either with cash or by accessing extra credit, businesses could raise prices due to not being able to keep up with supply at the rate that consumers are wanting. Businesses also might see this as an opportunity that they can raise their prices more without losing customers, as demand is so high that consumers will buy regardless.
Supply chain issues
Supply chain issues can also lead to increase inflation. The coronavirus pandemic forced many factories to either shut down or limit production. This led to less supply across many different industries. On top of that, there has been a shortage of workers across different industries and it is more expensive to ship products right now.
The Russia-Ukraine conflict is also leading to limited oil availability, which is currently driving the prices of gas up. In turn, this also increases the cost of air travel.
In short, there is often not one single issue that drives the increase in inflation, and there are a variety of factors that come into play and affect different industries all at once.2
How to deal with inflation
While we can’t personally affect how inflation is roaring throughout the country, there are different steps we can take to help ourselves save money and not feel the sting of inflation as hard.
Make a budget
One good step is making a budget to track how much you are spending each month to hold yourself more accountable. You might be spending more than you realize in some areas or find that you have a recurring expense that you forgot about. You can then reallocate your spending to different areas, invest your money, or save some money based on your budget. For some more tips on how to create a budget, view these tips from The Balance or start developing a realistic plan with our budget worksheets.
Save money at the grocery store
While many of us are feeling the extra cost of food and groceries, there are many ways we can try to grocery shop on a budget. Our previous blog goes into detail on 14 different ways that you can save on groceries so you have that money to use elsewhere.
Make extra money with a side job
Side gigs have become increasingly popular these days, as many of us look for some extra cash to meet our financial goals. There are a variety of different ways you can make extra money with a side job, depending on your time commitment and how much you are looking to make.
Here are 13 different side jobs that provide a high reward for low commitment.
Investing can be a way to get out ahead of inflation and potentially receive a better rate of return on your money. Traditional savings accounts will most likely not provide a larger rate of return than the cost of inflation, so you may not be taking full advantage of your money by leaving it all in a savings account.
Nationwide has many different options when it comes to helping you prepare for your financial future with investing and retirement. Learn more about our annuity, life insurance, mutual funds, ETFs, retirement plans, and more here.
If you are looking for a financial specialist who can help you with your investing needs, you can find one here.
Take advantage of insurance discounts
Insurance discounts are also a great way to keep yourself on budget and save some extra money. Nationwide offers discounts on car insurance and gives our members a variety of different ways to save. We also believe that dependable homeowners insurance shouldn’t strain your budget. View our full range of available home insurance discounts here to help yourself start saving more today.
While we can all certainly feel the sting of inflation in our daily lives and products and services we buy regularly, there are various ways that we can work to save money and come out ahead. Whether it’s making a budget, finding ways to save at the grocery store, investing, finding a side job, or using Nationwide’s insurance discounts, find what works best for you on how to save money in your daily life.
Investing involves market risk, including possible loss of principal, and there is no guarantee that investment objectives will be achieved.