Prevent Price Inflation From Eroding Your Income!
Practical HACKS to Fight & Beat Inflation in 2022!
Updated December 31st, 2021
The coronavirus (COVID 19) pandemic has ushered in some unprecedented inflationary times – the likes of which we haven’t seen for nearly 50 years! So you would be wise to learn exactly WHAT inflation is and how you can best fight inflation – starting TODAY!
Summary: Price inflation is the general rise in the prices of goods & services over time. It results in less purchasing power for each dollar you earn or have saved. The best way to FIGHT inflation is by making some changes in your personal habits, cutting your expenses and making other lifestyle changes. Here we outline some practical & actionable ways to fight inflation – starting today!
The Definition of Inflation
The definition of Inflation is when prices for goods & services generally rise and each dollar you earn buys less than it used to in the past.
The federal government (US Bureau of Labor Statistics) tries to approximate this increase in prices at the consumer level using a standardized & representational basket of goods & services that the average American family purchases. This is called the CPI (Consumer Price Index).
What is the Current Inflation Rate?
As of the writing of this post, the current inflation rate, as represented by the CPI (Consumer Price Index), currently stands @ 6.8% over the last 12 months. (November 2021 CPI numbers).
So What Does Inflation Mean to Me on a Personal Level?
Inflation, on a personal level, means that if you are just standing still and earning the same amount from year to year – you are actually falling behind!
Just using the current CPI number from above – prices have generally increased about 6.8% over the last 12 months. That means that you would have to spend 6.8% more TODAY to buy the same goods and services you were a year ago.
An Example of Inflation
By way of a more concrete example of inflation – let’s say you could buy a doohickey, a whatchamacallit, & a thingamabob last year at this time for $10.00. Due to an inflationary rate of 6.8% over the past 12 months – to buy that same doohickey, whatchamacallit & thingamabob RIGHT NOW would cost you $10.68!
A real-world example of inflation would be gasoline prices. According to the EIA (Energy Information Administration) the average cost of a gallon of gas in 2020 was $2.17/gallon. As of the writing of this post in late October 2021, the national average cost of a gallon of gas is $3.26/gallon. That is slightly more than a 50% increase in gas prices over the last year!
So unless you are earning more money now than you were a year ago – you are losing ground to inflation and becoming poorer!
Why is Everything So Expensive? What is Causing Price Inflation?
In 2021 we are starting to see some persistent & troublingly high inflation due to:
- Disruptions in the supply chain caused by the corona virus pandemic
- Distortions in the labor markets (early retirements, unemployment, restricted operations) related to the pandemic
- Massive stimulus programs adopted & established by Congress
- Policy changes relating to shipping ports on the California coast
- Ultra-loose monetary policies adopted by the Federal Reserve
- Dramatic increases in fuel & energy prices
- Opportunistic pricing practices by some bad actors
Effects of Inflation – @ a Personal Level
- On a personal level, price inflation erodes the purchasing power of your savings & earnings. That means that every dollar you earn of have saved up will purchase less (fewer goods & services) than it did in the past.
- Since your purchasing power is being eroded by inflation, it will force you to spend more money for the same stuff you have always bought. That is, unless you change your purchasing habits (which I am advocating that you do). Therefore – inflation will also NEGATIVELY impact the amount of money that you are able to save and accumulate – either for retirement or some other financial goal.
How to Deal With Inflation – It’s Your Choice
Now, you can just try to hold on and wait for inflation to subside – or you can take action to prevent inflation from tearing into your wallet – or pocketbook RIGHT NOW! Rather than endure it – I will fight it – and call on you to do the same (for the sake of your own financial wellbeing)!
The BEST way to fight inflation is to SPEND LESS.
Here we outline 111 ways to be proactive and contain inflation, or even reverse it, for your own personal economy – which is really the only thing that you have control over! Remember – If you don’t want to suffer the same results that everyone else is – you have to be willing to take action where & when others are not….
Understanding the REAL Cost of an Item You Purchase
Before we go through these practical & actionable ways to fight inflation – we should first talk about the REAL cost of the items you purchase.
One of the best ways to help put the real cost of an item into perspective is to think of what you actually need to EARN to buy that item. I say this – because it forces you to factor into the cost of the item you want to purchase – the income tax you have to pay on your income & earnings to have the available funds to make the purchase. And even one step further – not just the income tax you have to pay on your earned income – but the sales tax levied on the item as well. So the REAL cost of that item is not only the PRICE of that item, but the income tax & the sales tax that need to be paid to make the purchase as well. It is really a better representation of what something actually costs you!
So, if an item has a price of $1.00 and there is an 8% sales tax to be collected at the time of purchase the item – the true cost of the item in terms of EARNINGS is really what I need to EARN to pay both the PRICE of that item PLUS the SALES TAX to be charge on the item.
If you are in the 25% income tax bracket – the calculation looks like this:
($1.00 (Cost of the item) + 8 ¢ (Sales Tax)) / .75 = X
Solving for X we get $1.44
So the REAL cost of that item with a PRICE of $1.00 in terms of EARNINGS is, infact, significantly higher @ $1.44.
So before you dismiss something as only cost a few bucks – take a second and think of TRUE COST of that item in terms of what you really need to EARN to pay for it!
Budgeting Tips: 111 Specific, Practical & Actionable Ways to Fight Inflation!
| Food & Health | Entertainment |
| Transportation | Miscellaneous |
| Financial |
Inflation Fighting Hacks for 2022
Tips on HOW to Fight & Beat Inflation
Food & Health
Fighting Inflation in the Kitchen & @ the Dining Room Table!
- Drink more water. Drink more water – less soda, juice blends & alcohol…. You are made of roughly 60% water – that is what you should be drinking most of the time too!
- Eat less meat. Eat less meat, more vegetables. Meat is expensive – and only going to get more expensive. Not only will your pocketbook thank you – but your body will too!
- Plant a garden. Grow your own vegetables and fruit. You may not be able to grow as much as you eat – but you can probably make a dent in what you spend. It is also rewarding to put a seed into the ground and see something substantial grow from it!
- Eat less / smaller portions. It’s just you and me here right now. Let’s be honest, look in the mirror – you probably need to lose a little weight anyways! You will both feel better and look better.
- Find cheaper store brand substitutes for more expensive name brand products. Most times there is no noticeable difference in quality. Many times, the product is manufactured at the very same plant and just private labeled for the store.
- Eat out less. Learn how to cook & prepare your own food. Restaurant food is more expensive, you pay for service – and it is typically less healthy than food you prepare at home – since it is loaded with fat and sodium.
- Become a 1 toothbrush family. Use only one toothbrush for the entire family! See the video.
- Use less toothpaste. You really don’t need to use as much toothpaste on your brush as they show in the advertisements. You can use a fraction of that amount – and still get your teeth clean!
- Use coupons. If you are buying name-brand products – at least seek out coupons to save yourself some money on those items.
- Forego single serving convenience packaging for snacks. You are paying A LOT more because of all that extra packaging.
- Buy staple goods (beans, paper towels, maple syrup etc.) in bulk. Learn how to read the tags on the store shelves. They will tell you what the cost per unit of measure is – so you can better compare two items. We recently bought a gallon of maple syrup. The 12 oz bottle was priced at $7.99. The Gallon was priced at $45. 1 gallon in 128 ounces. 128/12 = 10.67. It would take 10.67 smaller containers to hold the same amount of syrup as the gallon jug. 10.67 x $7.99 = $85.23. To buy 1 gallon of maple syrup in 12-ounce containers would cost $85.23. Instead – we paid $45 for the larger “bulk” container and saved over 47%!
- Use a comparison service to shop for prescription drugs. It is no surprise that prescription drugs can get extremely expensive. However, as technology progresses, distribution and price comparisons services in the pharmaceutical field have emerged as a means to save consumers money. Check out GoodRx or SingleCare. They survey prices & discounts from over 70,000 pharmacies in the US. They provide you with a card and/or coupon that you can take to your local pharmacy to get your discounted price – of up to 80% off! Their service is free, but they also offer premium services & discounts with a paid membership. Go to GoodRx.com or SingleCare.com to learn more.
- Give up that expensive gym membership – and exercise at home. You can probably buy a set of weights / gym equipment in your local community for cheap on Facebook Marketplace/Ebay/Craigslist. You will also save money from not commuting to the gym. Now all you need is the self-discipline to make sure you use the equipment!
- If you are still smoking – just stop! It’s just a bad smelly habit that is not good for you or the ones around you. According to the CDC it is the leading cause of preventable disease & death in America, and it is EXPENSIVE! So, time to quit. Unbelievably, for the first time in 20 years – cigarette sales actually INCREASED last year…..
- Eat those leftovers/waste less food! Don’t just put them in the refrigerator. Make a point of actually consuming them. Less wasted food means more money saved!
Transportation
- Leave the car behind – and walk or ride a bike to your destination.
- No more special trips. No more special trips to go to one store to get a non-essential item. Plan & combine errands and trips. Fewer trips means less money spent on gas & car maintenance.
- Carpool with friends. If you are all going the same way – why not travel together and all save a little? Contribute for gas and make it a win/win for everyone.
- Don’t just drop-off. I often (very often) have to drive one of the children to various activities. Instead of dropping off & driving back home – just to turn around 20 minutes or a half-hour later to pick up the kid – I usually stay & accomplish something. I routinely pack a book, laptop or something else I need to read or review. That way, I can accomplish something while I’m there and save some money – since I cut the driving in half!
- Slow down on the highway. Drive 55 mph instead of 65 mph to save on gas. The faster you drive – the less efficient your car is – because of higher wind resistance & higher rpms (revolutions per minute) the engine has to turn at higher speeds. Expect you fuel efficiency to drop by about 8% if you drive 65 mph rather than 55 mph and ~17% if you drive 70 mph. Oh – and driving a little slower greatly reduces you chances of having an accident! See here for more information and a neat calculator. mpgforspeed.com
- Take a driver safety training course. In most states – if you take a driver safety training course you can expect a 10-15% reduction in your auto insurance rates for up to 3 years. To-boot, you will probably pick up a thing or two to make you a better & safer driver!
- If you are buying a new car – consider a hybrid or electric vehicle. Over the service life of the vehicle – you may save money by buying something that uses less/no gasoline. Electric vehicles can have significantly less maintenance cost – as they have fewer moving parts, don’t require oil changes & use brakes less frequently (if you are utilizing one-pedal driving). Additionally, there are some free charging stations available. I have a Chevy Bolt (4 years now) & you can read about my experience and cost savings HERE.
Financial
- Eliminate Impulse Purchases. Institute a self-imposed, mandatory waiting period before you make any non-essential purchases. I would suggest something between a week to 30 days. You may find that after waiting for the prescribed period – that the urge to make the purchase may have subsided, and you will have saved yourself some money.
- Reinstall your operating system on your phone or computer instead of buying a new one. Having a clean install will make your phone or computer feel like new again!
- Cut you own hair. Cut your hair & your kids’ hair – yourself. Cutting hair is not rocket science! And – it grows back if you make a mistake…..
- Replace expensive name-brand luxuries with less expensive alternatives. Luxuries are, by definition – NOT necessities. So, if you insist on still buying them – find less expensive alternatives.
- Return Bad Purchases. If you buy something at the store – and it disappoints you – return it for a refund or store credit.
- Turn trash to cash! “Recycle” some of your belongings. Sell unneeded/unwanted items on Facebook marketplace, Craigslist or Ebay – or even an old-fashioned garage sale. These are all great ways to turn trash into cash! As the saying goes, “one person’s trash is another person’s treasure”! I have been truly surprised at the stuff that people are willing to buy.
- Buy items used – or from Amazon Warehouse deals. No need to pay full price – when you still have the peace-of-mind that you can send the item back to Amazon if it doesn’t work or is broken. I have been amazed at how much I can save and how small most defects or surface scratches are on the items that are Warehouse Deals!
- Use a rewards credit card. Use a rewards credit card like the Fidelity REWARDS VISA. You can earn 2% cash rewards for every purchase you make and have your reward proceeds automatically swept into your Fidelity investment account! If you are eligible to make a ROTH IRA or Traditional IRA contribution – you would be able direct those rewards to either of those accounts as well. It’s a great way to save a little extra towards your retirement! You are really only paying 98% of the cost of any purchase and reclaiming 2%. Ignore your rewards account for a while and you will be surprised to see how quickly it accumulates!
- Find a side-hustle to earn a couple of extra bucks. Consider something like blogging – which can be an excellent source of passive income that can help you gain more freedom, and where your compensation is not just based on trading dollars-for-hours. Check out my post HERE on how to set up a niche website or blog in 7 minutes.
- Be aware of SHRINKFLATION! Not only are prices going up – but many times the SIZE of the package you are buying is also shrinking! Think you are still buying 64 fluid ounces of OJ (Orange Juice) at the store? Check that label – I bet it is no more that 59 fluid ounces! Check that toothpaste tube and container of yogurt too! (Definition of Shrinkflation – when the container size or volume of product decreases with either no change in price or the price also increases).
- Pay your bills online. Most bank or brokerage firms provide a bill pay feature for free. If so – that means that you can eliminate postage costs for mailing out your payments. You can also automate your payments – ensuring you don’t incur any late fees. Or better yet – if you can pay the bill on your Fidelity rewards VISA credit card without any surcharge – you avoid all postage and get your 2% back!
- Maximize matching contributions to your 401(k). This is stating the obvious, we know, but be sure to take full advantage of your employer matching contributions in your 401k or other retirement plan at work. For example, if your employer matches 50% of your contributions of the first 6% of your pay–contribute at least 6% or more of your salary into your plan. It’s basically “Free Money”! All you have to do is save a little of what you earn – and your employer will match that up to a specified percentage. A “guaranteed” 50% return on your investment like that is very hard to beat!
- Shop out your home & auto insurance. Insurance companies are one of the few industries that seem to embrace a philosophy of PUNISHING their long-term client! So shop around – and you might be surprised at what you can save!
- Get some Interest Rate Savings. Consolidate Higher Interest Debt to a lower interest rate loan. Resolve to pay off your credit cards EVERY month and don’t carry any balance on them!
Entertainment
- Utilize your public library more. Instead of buying books – check them out from your local library. You don’t even have to go to the library anymore to physically to check out books – as many/most libraries allow you to check out books & magazines digitally to read them on electronic devices like your phone or tablet. Don’t forget – you are already paying for those books & magazines through your taxes.
- Check out a movie from your local library. Many public libraries also offer movies on DVD for loan. Check out a movie from the library instead of going out to the movie theater.
- If you really want to go to the movie theater – go to a matinée! Matinée prices are usually cheaper – since they are at off peak times. Matinée prices at our local Regal theater are presently $9.40 for adults versus $11.50 in the evening. That’s a little over an 18% savings!
- Re-examine your cable bill. Do you really need that many channels? Consider cutting cable TV entirely and going with OTA (Over-TheAir) TV – yes, with an antenna, and an Amazon Recast (DVR) for recording your favorite network TV shows.
Miscellaneous
- Use Microsoft Edge Browser. Microsoft Edge offers a shopping comparison feature as well as a coupon finding service that can help you save money. I recently bought a laptop and was impressed at how it got me a better deal than I was able to find myself.
- Use CamelCamelCamel. For those of you who don’t know – Camelcamelcamel is a price tracking website that works with Amazon.com. It can give you historical data on pricing as well as alert you when an item reaches a target price. It’s a great way to make sure you are getting the best price!
- Do more home projects yourself. Rather than hiring someone else, take some initiative and tackle that home project yourself! There are plenty of DIY resources – such as instructional videos on YouTube.
- Use clothes racks to dry your clothes. In the summer just set them up outside in the sun. In the winter you can set up your clothes racks inside your house/apartment. Not only will it save you money from running the dryer – but will help maintain healthy & comfortable humidity levels – especially if you have a forced hot air heating system.
- Re-examine your cell phone bill. Couldn’t you really get by without cellular data? WiFi is almost everywhere anymore. And most things that you use mobile data for can probably wait until you get back home.
- If you still have a landline – buy an Ooma Telo. You can transfer your existing number and save a whole lot of money in the process! The Telo will use your existing Internet access and cost you about $7/month. It uses VOIP (Voice Over IP) technology.
- Embrace minimalism & simplify your life. Life is not really about things – but rather shared experiences with the ones you love. A simpler life is a happier & more relaxing life! Less is more and allows you to focus on people rather than things!
- Cut out the dry cleaning. Dry cleaning garments is a hassle, inconvenient & unhealthy. And let’s face it – people just aren’t dressing up as much these days. So, find more clothes that have a poly-blend and save yourself a little money in the process.
- Switch to Microsoft Bing as a search engine. Microsoft rewards you for using their search engine. You just have to do some searching, some quizzes and polls and you can collect a few hundred points each day. When you get to around 5,000 or 6,000 points (depending on level attained) you can redeem your points for something like a $5 Target, Walmart or Chipotle gift card. I can usually earn 2 gift cards a month. The fastest way to get your searches completed is to search for images – and keep clicking the related search items until you are done. For the most part the quizzes and polls are fun and amusing.
- Make sure you are not spending money on things that aren’t important to you. If you find you aren’t watching TV and the expensive channel package you are paying for – then cut it!
- Reuse paper towels. Rinse them off – or use them to clean the floor before you get rid of them.
- Tame that thermostat! Turn the heat down a couple degrees (or the air conditioning temperature up a few degrees).
- Buy & use a programmable thermostat! We generally have our thermostat lower the temperature in the house if we are going to be gone for more than 4 hours. We also have it lower the temperature at night while we are sleeping. A pretty good rule of thumb is to lower the away temperature by about 1° for each hour we are gone/sleeping. So, if we are going to be gone for 8 hours – we would lower it by ~8°. Get a thermostat that can handle customization by the day. THIS is the thermostat we use and have for several years. For other options click HERE!
- Stop paying for a lawn service to mow your lawn. Do it yourself and get the extra exercise. Get an electric lawn mower – and save even more money! Here are 2 I have owned and really liked! Electric Lawn Mower1 & Mower2.
- The night-rate. See if your electricity provider offers a night-rate, or off-peak rate – which is lower than the standard rate. It may require getting a new meter installed at your house. Use appliances that consume a lot of electricity during the off-peak window to save some money on electricity costs.
- How many hours do you need to work to buy that item? Before you purchase something that is not a necessity – consider hour many hours you have to work to pay for that! Don’t forget to factor in both income taxes and sales tax! I bet it will make you think twice about buying some things….
Conclusion
OK, I may have injected a just a little humor into my list – in that there are some totally silly suggestions in here that are not meant to be taken seriously! But which ones they are – well – that’s for you to decide!
Although I don’t yet have 111 of them – and I plan on adding to this list over time, I felt there was enough here to post at this time.
The strategies & budgeting tips I outline here to help you BEAT inflation could also be used to fight debt or accumulate funds towards a significant financial goal.
Remember, if you don’t want to be like everyone else and suffer the pains of inflation or debt, you have to do things differently than everyone else. Take up the fight against inflation TODAY and keep more dollars in your wallet!
I hope you found this post helpful in outlining some very practical ways that you can beat inflation.
If you have any productive suggestions or constructive criticism, please leave a comment below.
Sincerely,
Other Search Terms
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Fabulous tips! Inflation is definitely revealing its impact on our daily life, so I love these useful, categorized tips. <3