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You might have noticed that suddenly your grocery bill is much higher than it’s been in a very long time, but you aren’t buying anything unusual. Your electric bill goes up even though you aren’t using more energy. Even your medications are pricier than they’ve ever been. And of course, you’ve likely seen the pain at the gas pump, where prices soared this past year before settling down to a more reasonable level.
Are you worried about rising prices? You’re not alone. A Consumer Reports survey of 2,000 adults in the United States found that 97% were concerned about the current rising prices, and 98% were concerned that costs would continue to rise.
Those rising costs are due to inflation. Read on to learn about what inflation is, how it affects you, and how you can save money during a time when finances are tight.
What is Inflation?
According to the International Monetary Fund, inflation is “the rate of increase in prices over a given period of time.” It can be stated as a general value, or it can be broken down into how much a particular good or service has gone up within a certain period of time. During good financial times, inflation is usually reported as a general monthly percentage that is easily ignored by the average person. But during tough times – like right now – it is widely reported on a monthly basis and breaks down the increase in cost of goods and services.
Inflation can be quite unpredictable, and how high prices go and how long those prices persist depends upon a wide variety of factors, many of which aren’t fully understood even by economists. What we do know is that inflation was at a rather reasonable 1.4% in January of 2021 and soared to a troubling 9.1% in the middle of 2022[1]. No one can really say for sure what 2023 will bring.
What does that mean for you? The cost of the things you need to buy goes up, which takes more money out of your pocket. The Consumer Price Index, which tracks inflation across many categories, reported that shelter, food, and medical care were the places where prices increased the most this past year.
Even though inflation fueled the highest cost of living increase in Social Security since 1980, many seniors find that the higher cost cuts into the extra cash they received, making it seem as though they didn’t get a bump at all[2]. Tightening the belt is an effective way to make life more comfortable during times of inflation.
Ways to Save Money During Times of High Inflation
Keeping your costs down during times of inflation is a bit different than saving your pennies at other times. When inflation begins to rise, it’s time to look at longer-term solutions for your finances. Here are some of the best ways to keep more money in your pocket.
Put off home renovations. Though it might be tempting to spend money on a home improvement project – especially since you’ve probably spent a lot of time in that home during the pandemic and now want to see something different from day to day – it’s not a good idea to sink a lot of money into improvements while inflation rages. This is especially true if you hoped to get a loan to cover the work, as interest rates are much higher these days.
However, it is still a good idea to go with modest aging in place solutions that can make your home safer. That’s because the cost of grab bars in the shower, railings on staircases and ramps, brighter lighting throughout the home, non-skid flooring, and even lift chairs that help you get up and down from a sitting position are much cheaper than the hospital stay you might experience if you suffer a fall or other serious injury at home. To that end, affordable medical alert technology is also a great idea, as a medical alert watch or pendant ensures that if the worst does happen, you can get help right away, which results in the best outcomes.
Keep your investments where they are. Though inflation can make the stock market do frightening things, it’s a good idea to keep your investments where they are. Experts say that riding out the downturns in the market is the best way to ensure you keep enough money for retirement[3]. Though it might be tempting to pull your money out and convert it to ready cash in your bank account, this takes away the opportunity for higher returns when the interest rates start to rise.
Avoid additional debt. Taking on more debt right in the midst of high inflation is never a good idea. If you use credit cards and carry a balance, fluctuating interest rates can wreak havoc on your credit score. Taking out a loan might cost much more at a time when you are trying to save money. Be conservative with your spending and put off whatever purchases you can.
Budget well when grocery shopping. Grocery prices have been hard-hit by inflation this year. In November 2022, the cost of groceries had increased by 10.6% over the past year. That additional hit to your grocery bill, on top of extra expenses for housing and energy, can really push your finances to the limit. Here are some tips for budgeting for groceries in the midst of economic uncertainty:
· Buy generic products as often as you can.
· Buying in bulk might allow you to purchase an item at a lower price. You can freeze what you don’t use in single-serving containers for future meals.
· Look at weekly sales flyers and use coupons.
· Consider going meatless a few days a week. Beans and eggs are cheaper and still provide protein.
· Hit the local farmer’s market to find good deals on in-season produce.
· Start using lower-cost items as a base for your meals, such as potatoes, pasta, beans, or rice.
· Pay attention to the costs from month to month. For instance, Consumer Reports points out that the cost of meat, fish, eggs, and poultry increased by about 9% in September – but the cost of cereal went up by a whopping 17.7% during that same time. Make a point of stocking up on the things that are less expensive and building meals around those.
Protect yourself against high medical bills. Getting injured in an accident during times of high inflation can lead to greater financial strife down the road. Why? Because as of November 2022, medical care services are up by 4.4% and medical product costs are up by 3.1%. That price hike means that if you wind up in the hospital, it’s going to be more expensive than it was a year ago.
Do what it takes to keep yourself safe and healthy. Make sure to take all medications on time and see your doctors on a regular basis. Eat healthy foods and exercise regularly to stay strong. Keep chronic conditions under control. And consider an affordable emergency response solution to help you in the event of a fall, accident, or other emergency. The sooner you get assistance for an injury, the better your likelihood of a quick recovery.
Shop around for new insurance. Though some of your bills are fixed, such as the mortgage, others allow you the opportunity to shop around for a better deal. Insurance for your home, vehicle, and other possessions is a great place to cut costs. Consider these ideas:
· Look into companies that offer a safe driving discount.
· Consider your deductibles. Can you raise them a bit to lower your monthly premium?
· Do you really need all the coverage you have? Look for places where you could reduce coverage. For instance, if you own two vehicles and very rarely drive one of them, you might be able to reduce your coverage on the one that usually sits in the driveway.
· Get quotes from insurance companies and compare them. You might find that one is much cheaper than others.
Look at your medications. When you’re looking for cost savings, consider the brand-name medications you might be taking. While in some cases the brand-name medication might work better for you, changing to generic meds might be an option for some of them. Depending upon your insurance coverage, changing to generic medications could save you hundreds of dollars each month. You can also look to savings programs from pharmaceutical companies that might bring your costs down by a significant amount.
Find ways to reduce energy costs. Energy costs rose 13.1% in November 2022, which can cut deeply into your budget[4]. One of the best ways to reduce these costs is to make your home more insulated and energy-efficient. To do so, try these tips:
· Use energy-efficient lightbulbs. Seniors should look for LED bulbs that are very bright, so as to help them avoid falls.
· Unplug all your electronics when they aren’t in use. Just because they are turned off doesn’t mean they aren’t using power! Vampire power, also known as phantom power or standby mode, can account for up to 20% of your energy bill each month[5].
· Shop online and have groceries delivered (if it doesn’t cost more than a small nominal fee). These can help you avoid using your vehicle, which can save on fuel costs.
· Seal up the drafty areas around windows and doors. Inexpensive weather stripping and caulking go a long way toward keeping your home cozy.
· Set your thermostat lower in the winter and higher in the summer. But seniors should beware that the risk of hypothermia can increase as you age, especially if you have certain medical conditions that make you more sensitive to cold. You can actually suffer hypothermia even indoors, in your own home[6]! Talk to your doctor about a safe and proper setting for you.
Reach out for resources to help with the bills. Those who are on a fixed income might feel the heat of higher prices and wonder how they can afford the bills. USA.gov offers a wealth of resources to help, including assistance with energy bills and rent. Low-income seniors can benefit from programs like Meals on Wheels, which can help ensure better nutrition even when groceries are too expensive. And GoFundMe offers a comprehensive list of places to go for financial assistance.
Consider the Little Things
Think about the little things you pay for every day, week, or month. Do you really need those things? Is there some way you can cut corners and still have the things you enjoy?
· Look at your TV and cable services and pare them down to only what you really need.
· Buying your latte from the local coffee shop can cost up to five dollars a day (more if you’re quite fancy with your Joe), so making your coffee at home and leaving the latte for a special treat can save cash.
· Shopping at warehouse stores can allow you to save by buying in bulk.
· Look into your phone services and try to negotiate a better deal. Some companies have special plans for seniors with lower monthly rates.
· If your internet is getting pricey, consider help from the Affordable Connectivity Program.
One thing you should never skimp on is safety. Make sure you have smoke detectors and carbon monoxide detectors on every floor and near bedrooms, and they are in good working order and have fresh batteries. Make sure your fire extinguisher has not expired. Keep electrical cords out of the walkways in your home and reduce clutter to make it easier to get around. And if you don’t have a medical alert pendant, now is the time to consider it. Alert1 has systems starting at $20/month, and does not charge for the use of equipment. Affordable emergency alert systems can be used to summon police, fire, ambulance, family, friend, or neighbor, and can help you avoid the dire consequences – and higher medical bills – of waiting a long time for help to come in case of emergency. Having a panic button alarm at your fingertips is incredible peace of mind that can also save a lot of money in the long run.