How to spend less when prices are high

From Conserving to Creativity

When prices on consumer items are affordable, you can enjoy a certain sense of economic freedom, especially when your income is at least keeping pace with the rate of inflation. However, when those costs increase but your earnings don't, your personal budget constricts - making you less financially free than you used to be.

Today, millions of Americans are feeling the pinch. According to an April 2022 Bureau of Labor Statistics report, wages and salaries went up by 3.8 percent but inflation rose by 2.4% percent as of September 2024. So if you're struggling to make ends meet, you're not alone. You can take some of the sting from the situation. Here are a few ways you can adapt to higher than normal prices on goods and services.

Wait out major purchases

Now may not be the time to make especially expensive purchases such as furniture, appliances, electronics, and cars. International and domestic supply chain disruptions are contributing to their escalated prices. Though no one knows exactly when everything will settle down and their costs will normalize, you may want to hold off until they do or you feel comfortable with the outlay.

Reduce the cost of essentials

Gas and groceries are the top two household expenses that are rising dramatically in price. Of course, if you need to drive, identify the gas station that is offering the lowest price. Download a free app, such as Waze, which will lead you to the right pump wherever you go. For supermarket shopping, plan ahead and stick to the items on your list.

Know how much you want to spend ahead of time and keep a running total as you shop. If your intention is to keep your weekly food costs to $200, use the calculator on your phone and tally your spending as you're tossing items in the cart. It will inspire you to make the best choices, and you won't be shocked when you see the total at the register. And definitely signup for the "club" memberships, which are free supermarket plans offering instant discounts on certain items you need.

Get paid for using your credit card

If you have a cash-back credit card that doesn't have a revolving balance and you can charge it while committing to keeping the debt to zero, now is the time to whip it out. Or apply for one, especially if it offers a welcome bonus. After you meet the minimum spend (usually a couple of thousand dollars in a few months of opening the account), you'll get a sum of money. As you use the card, you'll be adding funds into your budget, too. For example, if you charge $3,000 a month to a card offering 2% cash-back, you'll earn $60. That's free money you can spend on something you've put off, like a pair of shoes for your child's growing feet or a haircut for you.

Buy now, pay later

If you do need to purchase something big that is outside your normal budget, and you need it immediately, avoid paying finance fees that will increase already higher prices. Consider a "buy now, pay later" loan. With a small down payment, you can get the item and pay the remainder in a few installments. Look for these arrangements on e-commerce sites, mobile apps, and department stores. In most cases interest is not applied, so you won't waste money on fees but be sure to read the fine print.

Refine your spending

This is the perfect time to get rid of anything you're spending money on that you don't need. Focus on the areas where you won't feel the difference. Review your budget in detail and identify line items that you can easily reduce. These may be streaming services for entertainment that you rarely, if ever, watch.

Or maybe you are paying way too much for your cell phone and internet. Call the provider and ask what the current plan is. In most cases, it will be less. You may also determine that now is not the best time to dine out or order food for delivery. When you see how much you're spending in black and white, you may decide they aren't worth it for the time being.

Transfer existing debt

If you are saddled with substantial credit card debt and the accounts have high APRs, the finance fees are eroding your expendable cash, and at the worst possible time. All that money is going straight to the issuer rather than into your spending plan. You can add that money back into your budget by transferring the debt to a credit card offering 0% APR for a long period of time. This way you can pay the minimum (at least) without a penny going toward interest during the introductory time period. Suddenly you'll have a lot more room in your budget.

Sell unnecessary things

Yet another option is to take stock of what you own and that you have no use for. This could be everything from phones and laptops that you have already upgraded. There are plenty of online companies that you can connect with to sell what you have. Or use Facebook Marketplace or the Nextdoor app (both free), to sell off clutter. You can use the proceeds to purchase the things you need that have become too costly.

These are just a few money-saving tips you can put into practice. Be sure to adopt those that work for you and your lifestyle. Often the best approach is a one-two punch: spend less, earn more. It's impossible to know exactly when prices on consumer goods will revert to normal, but by taking control of your own spending and saving, you can make strides in riding out the storm.

Looking for more information and support? Valley offers a variety of resources and information you can access and share with your team today.

This article is for informational purposes only and is not a substitute for individualized professional advice.

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