Managing expenses and minimizing the impact of rising prices can be challenging in the summer. However, you can reduce the impact of seasonal inflation by implementing small daily habits. Using these eight daily habits, you can beat summer inflation in order to protect your savings while also enjoying the season.
Related: What Causes Inflation? Everything You Need To Know.
1. Prioritize savings
We tend to spend our income and run out of money before we realize it. To save more, plan ahead, and figure out how much you can comfortably save each paycheck — then put that money away immediately.
By putting your savings first, you can live within your means.
Is there a particular amount you should save? It depends on your total income, the size of your household, and your savings goals. A common budgeting strategy is the 50/30/20 rule — 50 percent of your income should be set aside for needs, 30 percent for wants, and 20 percent for savings.
However, the idea of stowing away 20 percent of one’s income may not be feasible for many, especially those living paycheck to paycheck. It’s important to reduce expenses and to put money into a savings account at the beginning of every month, as well as not to tap into that savings for daily purchases.
A budgeting app can save time and help you stay on track with your savings strategy. Using these apps, you can determine how much money you can save each month based on your income and spending.
2. Cut grocery costs
According to the U.S. Department of Agriculture, a measure of economy-wide inflation, the Consumer Price Index (CPI), rose by 0.5 percent from April 2023 to March 2023 and 4.9 percent from April 2022. A 0.2 percent increase in the consumer price index for all food was reported from March to April 2023, and food prices rose 7.7 percent compared to April 2022.
Depending on whether food was purchased for home consumption or consumption away from home, food price inflation differs:
- CPI for food at home (food purchased at grocery stores or supermarkets) increased by 0.1 percent between March 2023 and April 2023 and by 7.1 percent from April 2022; and
- In April 2023, the consumer price index for food away from home (restaurant purchases) increased by 0.4 percent.
Despite a slower growth rate in 2023 than in 2022, food prices are expected to remain above historical averages. The prediction interval for 2023 is 4.9 to 7.5 percent, and all food prices are predicted to rise 6.2 percent. It is predicted that prices for food at home will increase by 6.3 percent, with a prediction interval of 4.5 to 8.1 percent. The price of food away from home is predicted to rise 7.7 percent, with a 7.0 to 8.4 percent prediction interval.
Thankfully, you can reduce your costs by planning before you go shopping.
Here are tips to save money on groceries.
- Plan your food budget. You can assess how your spending compares with suggested averages by comparing your budget with the USDA’s food spending plans. The USDA estimates that a man 19 to 50 years old with a low budget will spend $297.70, a moderate budget will spend $373.50, and a high budget will spend $453.50 on food each month.
- Meal planning. Prepare your grocery list ahead of time and plan your meals. By doing this, you will reduce food waste and avoid impulsive purchases. To save money, choose seasonal, affordable ingredients and buy in bulk.
- Choose cost-effective foods. Make meals with inexpensive staples like pasta, rice, beans, and potatoes. Fresh fruits and vegetables cost more than canned or frozen versions, and you can save money by switching to generic versions instead of name-brand products.
- Buy in-season produce. Choose locally grown, in-season fruits and vegetables to save money and obtain fresh produce. You can find affordable, high-quality produce at farmers’ markets and community-supported agriculture (CSA) programs.
- Shop smarter. If buying groceries, clothing, or household items, compare prices before purchasing. Take advantage of sales, discounts, and coupons to save money. Store-brand or generic products are often cheaper but still of good quality, so they are worth considering.
3. Think sustainable
No matter how you slice it, you’ll have to pay hundreds of dollars each month on utility bills this summer due to high electricity and energy prices. Adding to the problem, the United States and Canada have experienced some of the hottest summers on record in the last few years.
According to the Energy Information Administration, the average power bill will increase by about 2% this summer. The reason? Even though wholesale power costs have decreased, there is usually a lag before such reductions are reflected in monthly utility bills.
The good news? With these energy-saving summer tips, you’ll be able to keep both your home and your wallet comfortable.
Audit your electricity usage
An energy audit is a free service offered by many electric companies, which involves an examination of your home and an analysis of your power bills to identify inefficiencies.
Be smart with your thermostat
In summer, set your thermostat at 78°F or higher to feel comfortable. An extra degree of cooling increases energy usage by six to eight percent.
Also, your thermostat should be set higher when your family is away at school or work and lowered when they are home. To avoid forgetting, you can set your smart thermostat to adjust during these hours.
Make sure you have a clean air filter
The simplest and most effective way to improve the efficiency and performance of your air conditioning is to change the air filter. A dirty or clogged air filter restricts airflow and reduces your air conditioner’s heat absorption capacity.
You can reduce your A/C’s energy consumption by 5% to 15% by replacing dirty filters with clean ones.
Use fans
Air conditioning is much more expensive than running a fan. On your electricity bill, you’d spend about 5 dollars running a fan 24/7 for an entire month.
Keep your blinds closed
The greenhouse effect of the sun can be reduced by keeping curtains closed to block out sunlight.
Unplug anything you are not using
You can begin by turning off the lights when you are not in the room or when the outside light is sufficient. It costs 4 cents per hour to run a 40-watt light bulb — although Americans tend to pay more. As the bulb’s wattage increases, that amount increases as well.
Reduce the temperature of your water heater
It is common for water heater manufacturers to set the thermostat to 140 degrees Fahrenheit (60 Celsius). Typically, households should set their water heater to a maximum of 120 degrees Fahrenheit.
In short, you can save hundreds of dollars a year by lowering the temperature of your water heater.
Use less water
Consider taking shorter showers, repairing leaks promptly, watering plants during cooler hours, and using cans instead of hoses.
Last but not least, you may want to consider using public transportation, carpooling, or biking rather than driving alone if you can. As a result, you can save on fuel costs and lower your carbon footprint.
Related: 7 Easy Habits That Will Make Your Business More Sustainable (And Save You Money)
4. If you have good credit, take advantage of it
You may be able to lower your credit card interest rate if you maintain good credit-building habits, such as paying your bills on time and reducing your revolving debt. You might only need to make a phone call to get started.
“It works more often than you’d realize,” says Matt Schulz, LendingTree’s chief credit analyst. In the past year, almost three out of four cardholders who requested lower APRs got them — with the average decrease being 6.3 percentage points. “That’s a big deal and can save you hundreds of dollars in interest over the life of the balance,” he adds.
You may want to look into a rewards card if you don’t have a credit card that suits your needs, such as saving money on vacation this summer.
“The right credit card, used wisely, can save you a ton on your summer vacation,” Schulz says. “Whether you’re looking to save on gas costs for your big family road trip, airfares and hotels for your beach adventure, or foreign transaction fees for your dream trip to Europe — credit cards can make a huge difference.”
To find the right card for your needs, shop around. You should feel comfortable spending the amount needed to secure the bonus if you are applying for a card to take advantage of a sign-up bonus — and ideally, before interest is charged on the balance.
However, Schulz warns: “As great as credit card rewards can be, if you go into debt chasing them, the math no longer works in your favor.”
5. Get a better deal on your vacation by planning ahead
Despite the high price of jet fuel, some economists predict it will decline from the summer 2022 highs. However, accommodations and dining will be more expensive.
You may want to consider pushing back large vacations if you can. Take a staycation, for example. The goal is to stay close to home, visit local attractions, take day trips, eat at local restaurants, and relax. By doing so, you can save money now so you can take your dream vacation without incurring debt later on.
What if you want to travel this year? Plan an affordable trip in advance.
Start by booking your flights ahead of time — ideally six months ahead of time. Use online savings tools such as Hopper and Skyscanner to compare airfare rates. Depending on the day of the week, you can find the cheapest flights by having flexible travel dates.
Additionally, prices are usually at their highest from early June to mid-August. The demand for trips increases during the summer when kids are out of school. If possible, book your trip in the off-season or at the end or beginning of the peak season. You can often score great deals on airfares and lodgings. It is best to travel domestically and abroad at the end of August and September.
You should also avoid travel hotspots like Orlando, Yellowstone, or Italy. In addition, if you usually travel with friends or family, you may want to consider splitting the cost.
As a final option, you can earn points or miles on qualified purchases with a travel rewards credit card. Using your accrued points or miles to book airfares and hotels can save you a lot of money if you do not pay interest charges.
6. Trim the fat
In an era when prices are climbing at a rapid rate, this seems obvious. However, spending less is a habit that works regardless of the economic climate. Keeping a close eye on where your money is going is critical to investing and saving in the long run and an essential strategy for combating inflation in the short run.
Let’s all be honest about what we can decrease or eliminate (not many). Aside from that, using creative ways to save money also contributes a great deal. You can combat inflation in several ways, such as riding your bike twice weekly to work or grilling so you’re not using the oven.
Consider whether your memberships and subscriptions are worth the expense. Find alternatives at a lower price for those you don’t use frequently, or cancel any that you don’t use regularly.
A good example is cable TV. It is slowly becoming a thing of the past, with networks such as Netflix, Hulu, Amazon Prime, and others allowing subscribers to subscribe independently. If you can avoid the high monthly costs of cable, which can range from $49 to more than $105 a month, you may be able to save some money.
Additionally, you can attend free festivals, craft fairs, and outdoor concerts throughout the summer in your area. Free programs and entertainment are available at your local library for kids. Furthermore, YMCAs and parks and recreation centers may offer free online options.
Related: 23 of the Best Alternatives To Cable TV In 2023
7. Do things yourself
It may be more cost-effective to perform specific tasks or services yourself than to hire professionals if you have the skills and resources. As well as saving you money, DIY projects can give you a sense of accomplishment.
For example, if you’re saving money, consider removing landscaping or gardening services, which can cost $25 an hour or more. In the worst-case scenario, your lawn gets a little wild; in the best-case scenario, you get some exercise.
And, if you cut the cord, look for DIY projects to do. Some ideas would be planting a garden, setting up a lemonade stand, or playing horseshoes in the backyard.
8. Pay off high-interest debt
It is always a good financial decision to pay off our high-interest debt. It is even more important in today’s economic climate. Due to the rise in interest rates over the last three and a half months, variable interest rates on credit cards will also rise. As a result, interest rates may rise to 19% or 20% from 17% or 18%.
Adding a percent or two to your debt may not seem like much at first, but over time, it can harm your ability to pay off debt quickly. When determining crucial money decisions, eradicating high-interest debt should always be the top priority. It will save you dollars in the long run, which translates into more money in your pocket in the long run.
In light of changing economic conditions, you must be aware of your spending habits and adjust accordingly. With these simple daily habits, you can prevent summer inflation and keep your finances under control.
