Can’t “out-budget” inflation? Here are things you can do

Inflation is a nightmare for the many Americans who already stretch their dollars to cover basic needs. What happens when those dollars lose value?

They have to make difficult trade-offs, beyond cutting streaming subscriptions or purchasing cheaper, store-brand groceries. Instead, Americans coping with high inflation may now be have to choose between buying enough food and paying rent.

The families hit hardest by inflation typically have little in savings and few back up resources. Their limited financial means can be rooted in historical inequality, said Phuong Luong, a Massachusetts-based certified financial planner and founder of financial education firm Just Wealth. When inflation causes everything to become more expensive, for families of limited means, basic necessities can become unaffordable. 

You may have to scrape together cash to support yourself as well as extended family members. Perhaps you have to spend money and time traveling across town to the grocery store or the doctor’s office.

“Your proximity to people with resources and people with wealth is going to be different depending on where you live and who you are,” Luong said. “There’s a larger context than just expenses and budgeting.”

Here are some tips for combatting high inflation when money is already tight.

Prioritize essentials

First cover expenses that enable you to live safely including housing costs, utility bills and food. Also try to cover costs that enable you to work, such as transportation fees, your cell phone bill and child care costs.

Next-level priorities are those that trigger major consequences if you don’t pay them. Think taxes, child support payments and insurance.

For credit cards, aim to make your minimum payment, so that you don’t accumulate high-interest debt

Tap local resources

If you are struggling to pay bills, find support. Luong suggests Findhelp.org, which lists local programs designed to help Americans cut costs across different categories including food and medical care.

Call 211 or visit 211.org to look for assistance related to housing, health, food and emergency expenses.

Doesn’t hurt to ask

You might also save money by calling credit card and insurance companies, lenders, banks, cell phone providers and other businesses you pay, and asking for some relief.

With the pandemic affecting so many consumers, these companies “are a little more empathetic than they have been,” said Emlen Miles-Mattingly, co-founder of Onyx Advisor Network, a Sacramento, California-based network for minority financial advisers.

They might be willing to pause or lower your payments, or forgive overdue bills. Or they could even lower your interest rate.


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Connect with your community

To overcome financial struggles, “community is going to be major,” said Dasha Kennedy, an Atlanta-based financial activist and founder of The Broke Black Girl, a financial education community for African-American women.

Leaning on — or supporting — your family members, friends and neighbors can help ease costs. For example, Kennedy suggests moving in with family to lower housing costs. Or you can pool resources by sharing a vehicle or splitting payment of a large expense.

To network with supportive locals you’ve yet to meet, look to libraries, recreation and community centers. Or  connect with neighborhood groups on social media platforms like Facebook and Nextdoor.

Community members might post information about free local resources or share how they have been able to save money locally. 

Monetize your skills

Diversifying your income stream can help cover increased costs, too. If you’re already working, Kennedy recommends trying to increase earnings through your employer. Consider working overtime or negotiating raises and role changes.

Or explore side work — with caution. Plenty of online gigs could waste your time, take your money or misuse your personal information.

“It’s high time for frauds and scams,” Kennedy said. Trust your gut, and read reviews. Also check the Federal Trade Commission and Better Business Bureau websites for tips to avoid scams.

If you’re creative, you can turn to a platform like Etsy to sell homemade goods directly to shoppers. You can also sell unwanted household items and clothing on sites like Ebay, or online consignment stores like ThredUp. 

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