Whether you’re 28 or 68, you’re facing the impact of rising consumer prices on everyday expenses. Inflation continues to drive up the cost of essentials, making it more challenging to stretch your budget. The increasing prices of goods and services — from housing and transportation to groceries and utilities — demand smarter financial strategies to maintain stability and save.
Millennials, in particular, dedicate a larger portion of their spending to categories that have seen the steepest price hikes. Families are also feeling the pinch at the grocery store, with food prices steadily climbing, especially for eggs and dairy. As expenses rise, finding ways to optimize your budget and make intentional spending decisions is more important than ever.
Tweak your budget
I asked several financial advisers how millennials can mitigate inflation’s effects, and many of them brought up the basics of budgeting. Take a close look at your spending habits to see where you can shrink some bloat.
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To save gas, my husband and I swapped cars. He’s making his half-hour commute in my fuel-efficient sedan. I work from home and shuttle our kids to day care a few minutes down the road in his less-efficient SUV.
Before I buy groceries, I check my supermarket’s weekly flier for deals. Shopping at discount grocers, buying items in bulk, searching for coupons, joining store or gas-station loyalty programs, and charging purchases to a rewards credit card that offers rebates on everyday spending (for our picks, see The Best Rewards Credit Cards) are other ways to counteract price increases on essential expenses.
Trimming nonessential spending may produce bigger savings — and it doesn’t mean sacrificing everything that you enjoy. “You don’t need to start cutting lattes if you really love your daily coffee ritual, but you do need to recognize what isn’t high priority for you,” says Eric Roberge, a certified financial planner and founder of wealth-management firm Beyond Your Hammock.
If you have a pricey gym membership or pay for video-streaming services that you’ll use less during the summer months, consider putting them on pause.
Keep an eye on the future
Don’t overlook the budget components of paying off debt and saving. If you have access to a 401(k), contribute at least enough money to capture any employer match. Stocks tend to beat inflation over time, so make sure they are adequately represented in your portfolio.
Melinda Satterlee, a financial adviser and owner of Marathon Wealth Management, recommends that millennials allocate at least 70% of 401(k) or IRA contributions to stocks and the rest to short-term corporate bond funds.
Final thoughts
Finally, take a deep breath. Most millennials weren’t born the last time inflation was this high, and living through it for the first time as an adult is unsettling. “What we’re seeing today may last a year or two,” says Andrew Crowell, vice chairman of wealth management for D.A. Davidson. “It doesn’t mean prices are going to rise 7% a year the rest of our lives.”
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