MONEY HACKS: How to Adjust Your Budget for Inflation and High Interest Rates

Inflation and interest rates. These are the most talked about and frustrating hot topics right now. Even though inflation has slowed, it feels like we’re still shelling out more for everyday essentials like groceries and dining out. Has anyone else noticed their grocery bill has doubled?

In this episode, we’re sharing some practical tips to help you manage these rising costs. We’ll discuss understanding your cash flow and making smart adjustments to your budget, so you can keep enjoying your summer without breaking the bank.

Watch the full episode below and join the conversation – we’d love to hear your tips and tricks too!

Any money questions you’d like answered? Our Money Hacks series is created from conversations we have with employees, investors, savers, and all people planning for their financial futures. What topics are on your mind for our next episode?

Video Transcript:

Hey, this is Alex Assaley, and it's episode number 117 of Money Hacks. Today's topic is about inflation and interest rates. Is everything costing more and how do you handle the higher cost of goods and services? I'm sure for those who've been following the financial market, following the economy, you've probably heard that inflation is coming down and it's much lower than it was a year ago.

And while that's true, inflation has been now for about nine or ten months, hovering in the 3% range, not quite where the Federal Reserve wants to get it down to about 2%. Remember that what that means is a 2 to 3% growth over the cost of things the prior year. So, it doesn't mean that goods and services are getting less expensive.

It just means that the increase in the cost of those goods is going up much slower than it was before. The real challenge that a lot of us face is that certain goods, specifically things like groceries and eating out, have gone up dramatically. In fact, there is a post that was somewhat viral on social media of somebody who looked at their food costs from a few years ago, I think 2021 or 2022, and it was like $140 at the grocery store.

Now, today, nearly $350 three years later. So, you know, a $200 increase in groceries, well above the rate of inflation. But it just shows you that kind of this year-over-year increase in costs that we've been experiencing to the point that it's been a strain on a lot of cash flow and budgets for individuals and families. So, what can you do about it?

I mean, obviously, it's challenging to make wholesale changes. But I do think, as always, we're big proponents of being focused on your cash flow, having a good understanding of how much money you have coming in on a monthly basis, and then where that money is going, where you're spending the money and ensuring it aligns with your financial goals and priorities.

And for a lot of households, groceries, food, and eating out, were things even rent and housing costs have all gone up over the last few years and are now taking a bigger piece of some of these monthly budgets. So certainly, trying to ensure that you're continuing to keep up with that in terms of your earnings potential and earnings growth is important, but that usually happens on an annual basis during performance reviews, merit increases, and promotions. So, in the short term, the focus is really around understanding how those increased costs impact your budget. Are there things you can do? Are there compromises you can make to be a little more focused on your cash flow? I know it's tough to do, especially in periods like summer. People tend to, you know, eat out more, maybe go out, have family vacations that increase costs as well.

We are seeing that the rate of inflation is slow, which is a positive. But still, after a year with a couple of years of higher inflation, it's been challenging. So, if there are things that you have thoughts on or questions on, feel free to drop them in a response or a chat to this video, or if there's anything we can do to help.

Feel free to reach out to our team. Thanks!