Easy, Practical Steps to Adjust Your Budget for Inflation

If rising prices are rendering your budget Ineffective, stressing you out, and making you feel like you are just throwing money at bills faster than you can make it, you’re not alone!

Many are finding themselves caught in a constant tug of war between their expenses and their income, feeling the strain as prices steadily climb. Repeated price increases make it seem all that more difficult to save money on a tight budget.

It’s a frustrating reality for many. Whether you’re running out of money with ten days left in the month or facing a sudden spike of 30 or 40 percent in a regular bill, there are some specific steps you can take that will help you gain control, alleviate stress, and stretch your money further, giving you breathing room, leaving you feeling calm and in control.

I’ll show you the exact steps you can take to stop inflation from ruining your budget. By implementing these steps, you’ll learn why rising prices need no longer dictate your budget.

Watch our personal examples and step-by-step instructions.

Watch for the warning signs.

Sometimes there is advance warning and you can strike to lower costs before the actual increase takes place. For instance, Larry just read that the cost of cocoa and sugar are going way up. So, we will order five pounds of cocoa and stock up on sugar now, before the prices increase. 

Follow the sales cycles.

Knowing the sales cycles is a crucial part of saving money on grocery items. Each category of food at the store has a specific sales cycle. For instance, pasta goes on sale about every ten weeks. While sugar and flour are generally discounted around major holidays (when more people are baking).

Once you know the interval of the sales cycle on the items you most want to buy, you can stock up and buy multiple packages when it’s offered for a great price. The goal to get at least enough to last until the next sale.

Then, you’ll repeat that process when the cycle comes back around in ten weeks. By consistently buying and stockpiling during the sales cycle, you’ll always be eating the lowest priced food.

Read the supplements that come in bills.

Some are taken off guard simply because they have failed to read the information that the company has sent them. Most utility bills including: electric, natural gas, and water, have specific supplemental information included in them. This should be true whether you are paying online or from a physical bill.

It pays, literally, to read through this information. For instance, when we received our water bill last month we read it through the final page of the document.

To our surprise, this included startling announcements about an impending 42% raise in our average bill within the next eighteen months. If we had not taken the time to read the information they had sent, the rise in future bills would’ve taken us completely by surprise.

Thankfully, armed with vital statistics, we can plan our budgeting strategy well in advance of the higher bills.

Be proactive.

As soon as you become aware that your cost per month is going to go up, it’s time to start laying out a game plan for rising prices. To help us conceptualize options for cutting back on usage of any commodity, including vital ones like electricity and water, do something we call the “what if” exercise.

This simple, one-page worksheet can help you decide your plan of action and changes that you will make in that area of your budget. You should also note any other areas of your budget which will be impacted by that specific commodity.

For instance, rising gas prices not only impact the amount of money it takes to fill up the gas tank of the car, it also impacts crude oil refining, manufacturing costs, and transportation fees.

That means you will need to watch for increases in your home utility bills, groceries, and everything from lumber to toothpaste. In short, multiple areas of your budget could be changed by the price of gasoline.

Utilize a “stair-step” approach to planning. This means, you will consider three different levels of price increases. Then, add specific steps you can take or habits you can change, which will result in saving money in that specific budget area.

Here’s an example of the “What If” plan that we completed when gas prices were soaring in mid 2022. You’ll see that we completed all three stair step levels, adding steps we were willing to take to cut back in our regular monthly driving.

The first stair step level is slightly below what is expected to happen. This takes into consideration that your cost-cutting measures will at least be partially successful, meaning you can negate a portion of expected rises in costs.

The second stair step is slightly above what is expected. This allows you to have a back up plan – in case you don’t save as much as you had hoped or everything doesn’t go according to plan.

The final stair step is a worst case scenario. This allows you to create a “just the basics” plan. It’s what happens if your costs actually double due to the expected trend in inflation. Although we’ve never, personally, had to use this third level, it’s a great exercise in helping sort out “wants” from “needs”.

Track your usage.

Your budget is comprised of broad categories, which represent how you are spending your money each month for various products, services, or commodities. Before cutting back any area of your budget, you must first know exactly how you are spending your money.

In the case of our rising water bill, we considered the various ways we were using water each day and then grouped them under seven, basic, water-usage categories.

  • Showers
  • Cooking
  • Dishes
  • Drinking
  • Cleaning
  • Washing clothes
  • Flushing the toilet

Create a list of ways you can save money.

Your next step is to research specific ways to save money. For this, we use a “Frugal Inspiration List”

Using the water bill as an example, start by listing each of the major ways you are using water. Then, find ways to save money in each of those areas.

Leave space to list hints, tips, and hacks which are directly related to how you, personally, are using water in your home.

The reason a list of ideas this is important is that saving money begins with changing your habits. Having a list like this posted on your refrigerator reminds the entire family that the goal is to use less water.

Start regularly utilizing frugal habits.

It’s time to implement some of those money-saving tips you’ve just researched. Set a reachable goal for the budget category (or categories) that you are trying to get under control. Pick some new habits to try. Then, track your results.

To encourage yourself to stick with your plan to lower that bill, grab the low-hanging fruit. In other words, do what is easiest (and most obvious) first. This quick win will allow you to see that saving money really is possible.

Add more, new frugal habits every month. By following this pattern, you’ll be able to adopt the frugal lifestyle without feeling deprived. You’ll soon discover that small amount of money, saved over time, will add up to large amounts of money.

Find substitutions or workarounds

Is it possible to substitute something else for the item in your budget which is suddenly soaring wildly?

When the prices of meat soared. Many people, some for the first time, added “Meat free Mondays” to their menu plan. The number of Google inquiries about vegetarian or vegan cooking soared.

This is a classic example of consumers reacting to an unexpected rise in prices of something that they regularly purchased and yet chose to limit because of the cost.

Another scenario would be that you negotiate a lower price on your current plan or switch to a lower-priced plan. You may not get all the bells and whistles of your current plan, but it’s altogether possible that you’ll realized you didn’t need all the perks in the first place.

Seek expert advice.

Ask frugal people how they are saving money on the same item. Research how experts are recommending you reduce the usage of specific commodities. Hang out with like-minded neighbors and friends. Find community groups, filled with experts and “know-how”.

Learn everything you can, preferably for free.

Cut back.

When it comes to paying less every month for something, conscious consumption may be the best solution. By simply using it less or doing it less, you’ll save money.

Restaurant tabs are one of the obvious areas in which this concept applies. Unfortunately, eating out is also one of the main ways in which people tend to connect with family or friends. Once you have set your budget for social occasions, you may need to utilize a healthy dose of loud budgeting to emphasize to others that you can no longer afford to partake of the standard repast as often as you have been in the past.

If your budget allows, do leave some space for an occasional coffee or desert with them. Of course, you could also announce that although you won’t be joining them for dinner, you’re happy to provide drinks, music, and dessert at your house later in the evening.

Cancel, or stop using it.

Ask yourself if you really need it. Clearly you need water and electricity. But, if it’s something which is an “extra” you might decide to simply not buy it any longer. You may also find that simply by using less of something you can offset the increase in prices.

Keep Trying

If you’re not saving as much as you had hoped, don’t get discouraged. It takes three months or so to get the kinks worked out of any frugal savings plan. Take time to analyze what’s not working and what you can do differently.

Continue to be diligent and make adjustments. As you begin to see results, over time, you’ll feel more comfortable in the process.

Now that you know how to come up with a game plan for adjusting your budget, you may need more ideas of other areas of your budget which you can cut back.

When we were reaching for great, big financial goals while raising four sons on a less-than-average income, we found ways to cut ten distinct areas of our budget. It helped us spend less and save more than we ever had before.

I’d love to send you my list of those ten big budget cuts (I threw in step-by-step instructions and checklists, too) so you can get started saving money right away.

2 thoughts on “Easy, Practical Steps to Adjust Your Budget for Inflation”

  1. Hope and Larry,
    42% increase in your water bill is WOW! I will be interested in what you guys are planning to do to cut down on your water usage. I feel my husband and I have done a lot to cut back and use more wisely our electric, water and food consumption. I hope you can give us some new ideas on what to do on tonight’s program.
    Your prayer warrior,
    Katherine
    P.S. You guys are moving better and better. Keep up the PT!

    Reply
    • Right now we’re gathering ideas on water savings and then we’ll rank them by how likely we are to use each tip. (Gotta prioritize any list. LOL!) In the meantime, our electric/natural gas bill took a huge hike last month and I’m in the midst of trying to figure out what in the world we changed to make that happen! The good thing about frugal living is that you never run out of things to research. LOL!

      Reply

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