Dealing With Inflation is Easier – but Still Not Fun – if You Live Below Your Means

The word inflation in green surrounded by other financial words

True confession: I can’t stand articles that tell you what you should have done when we’re knee deep in a financial crisis. In 2008, people were saying you shouldn’t have purchased the house for no money down, even though you had already bought it. Early during COVID, people were extolling the benefits of having an emergency fund after unemployment rates went through the roof. To me these types of articles have always been advice offered too late.

Living within your means can help during inflation

I’ve noted before that it’s important to live on less than you bring home if you can. I’ve also talked about how my family has managed to live on less than 50% of our take-home income for years. In the current inflationary environment, having a little cushion makes life easier. When we go to the store and the same bag of potato chips has increased $1 in price we can shrug our shoulders and buy one. Or we can simply wince when the price of filling our SUV hits $70.

That’s not to say we don’t take action to lower costs. I still avoid spending more money than necessary. Instead of buying the $4 bag of name-brand chips, we often buy the $1.50 store brand chips (which were 89¢ just a year ago). I don’t drive around looking for deals, but if we find that our usual grocery store sells blueberries for $3.99 per pint and I’m at another store, I’ll look to see if they are cheaper.

So no, I’m not celebrating the increase in prices. My kids have laughed at me several times when I’ve exclaimed my disbelief at the price of something. It’s no fun. But having the cushion means while it’s no fun, we can still buy groceries without having to go into credit card debt.

Maybe you missed this boat

Maybe you’re thinking Wow this is just like the articles you hate, where I’m saying you should have lived below your means even though it’s too late. Here’s the deal though – it’s not too late. Unlike being stuck with a mortgage payment you can’t make in 2008, you can take steps now to reduce your bills. Shopping at less expensive stores, trying the store brands, making a weekly menu…there are ways almost everyone can spend less even as prices are increasing.

Inflation is normally a temporary situation. Temporary may unfortunately be longer-term than you want, but in the past the Fed has managed to get inflation under control. So try not to think of this as a life change and complaining I’ll never have Cheetos again. Whether you’re cutting costs with cheaper alternatives or taking on a part-time job to increase your income, you can reevaluate in six months or a year and perhaps you’ll be able to purchase brand names again.

However, when you’ve managed to get your finances back in order, try to take 5% or 10% and save or invest it for a rainy day. Unfortunately this is the second sharp increase in inflation I’ve lived through. Chances are we all may have to deal with this again. You’ll feel a lot more secure – if not happy at the rising prices – if you tame your spending and live below your means.

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