Six Money-Saving Tips When Inflation is High

Coins in a jar with a plant growing out of it

Most of us are feeling the squeeze of inflation these days. Prices are on the rise for everything from gas to groceries. According to the latest numbers from the U.S. Bureau of Labor Statistics, inflation is the highest it’s been since 1981 — a whopping 9.1%.

What matters most is what it all means for your finances. While you may not have control over consumer prices, there may be other ways to keep more cash in your pocket. Here are six money-saving tips for when inflation is high.

1. Fine-tune your budget

It all begins with your budget, which is really just a plan for managing your income and expenses. Your take-home pay is the first piece. Whether you receive regular paychecks or have fluctuating income, ballpark how much you make in a typical month. Then list out all your monthly expenses. This includes:

  • Essential bills such as your housing payment, utilities, phone, minimum debt payments, and so on
  • Fun money for things like shopping, eating out, and traveling
  • Money you set aside for financial goals (for example, paying down debt, building your emergency fund, or saving for a down payment on a home)

When you subtract your expenses from your income, how much do you have left over? If your budget is tight, you can adjust spending in one area to free up room in another. You might also look for ways to increase your income. Maybe that means negotiating a raise or bonus, job-hunting for a new role, or picking up a side gig.

2. Revisit your home and auto insurance policies

Your insurance premiums aren’t set in stone. Bundling your home and auto policies, for example, could bring down your monthly insurance expenses by 10% to 20%. Increasing your deductible is another option. Doing so can reduce your premium. (Just keep in mind that you’ll face higher out-of-pocket costs should you file a claim.) You might also consider reducing your personal property coverage within your home insurance policy. This can make sense if you’ve sold possessions, or your belongings have decreased in value.

Looking into customer loyalty discounts and other perks could pay off as well. Some auto insurers extend discounts to safe drivers, students, veterans, seniors, and more. And don’t be afraid to shop around with different insurers to compare what’s out there (Matic makes this part easy).

3. Request lower interest rates on your credit cards

If you have credit card balances, you may be tied to some pretty steep interest rates. The average APR is 16.65%, according to the most recent data from the Federal Reserve. Now for some good news—you might be able to reduce them simply by asking.

One recent LendingTree survey found that 70% of consumers who requested a credit card interest rate reduction were successful. The average reduction rate was 6.9 percentage points. Lower rates can help bring down your monthly payment and free up more room in your budget. All the while, you can continue making on-time payments to help maintain a healthy credit score.

4. Refinance your debt

Rising interest rates have been in the headlines lately, but refinancing can still make sense for certain consumers. If you qualify for a debt consolidation loan that has a lower rate than what you’re currently paying, you could use it to absorb your outstanding debts. You’ll then have one balance with a single monthly payment. Just be sure to read the fine print to see if there are any loan origination fees.

Another option is opening a 0% balance transfer credit card and using that to pay off your outstanding balances. You’ll pay no interest if you eliminate the debt within the introductory period. You might be hit with a balance transfer fee, but the overall savings could be worth it. It’s important to note that interest will kick in if you still have a balance at the end of the promotional period.

5. Pause your federal student loan payments

Speaking of debt, there’s still time to pause your federal student loan payments. The government introduced the temporary student loan moratorium early in the pandemic and has extended it multiple times. In April, President Biden announced that it’ll be on the table until at least the end of August. Time will tell if the freeze is extended again. If so, it could buy you even more time to ride out inflation.

Even if the freeze ends, you can still explore an income-driven repayment plan. Alternatively, you may qualify for deferment or forbearance.

6. Make your driving habits more efficient

The national average gas price at the time of this writing is $4.18 per gallon, according to AAA data. Now is as good a time as any to modify your driving habits. Below are a few potential ways to stretch your gas tank a little further:

  • Consider carpooling with friends, family, or coworkers
  • See if your employer will allow you to work from home to eliminate your commute
  • Leverage public transportation
  • Switch to biking or rollerblading when possible
  • Plan your errands in advance to avoid additional trips
  • Research which gas stations in your area have the best prices

There’s no escaping inflation, but some of the tips above might help you survive it without draining your bank account. In the meantime, Matic is here to help you save. We make it easy to compare top-rated insurance carriers with just a few clicks so you can get the best value for the best coverage.

This Blog/Vlog/Website is made available by Matic Insurance Services, Inc. for educational and informational purposes only. Matic makes no representation or warranty of any kind, express or implied, concerning the accuracy, completeness, or suitability of the information contained herein. Insurance products and services described may not be offered in all states. Eligibility for insurance will be determined at the time of application based upon applicable underwriting guidelines and rules in effect at that time. A Matic Insurance Agent can offer you practical guidance and answer questions you may have before you buy.