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The Inflation Headache: How to Prepare

Posted by Advocate Debt Relief Team

1 year ago / June 28, 2022

Everyone feels the financial pressure at the gas pump, grocery store, and housing. No one is immune to the massive headache inflation causes. Although inflation reaches the top of most headlines these days, no one can see when inflation might end.

Many experts say to buckle up for the long haul, but what does that mean? Polar opposite approaches have surfaced as some interpret that advice as stockpiling food and water. At the same time, others have buried their heads in the sand and don’t want any part of the doom and gloom.

Step one is to dive deeper into the state of our economy, then look in the mirror. There are spending habits we could modify to maximize our every dollar. Taking a more complex look at where you’re spending your money and how to spend it more wisely will help ease the financial pressure. 

Another overlooked threat is high-interest debt. This is a money-draining burden to carry, particularly in today’s economy. It’s certainly in your best interest to purge as much of it as possible, as quickly as possible.

The Data

An essential resource in understanding current inflation is the Consumer Price Index (CPI). This is a monthly report that measures the average change in the prices of consumer goods and services over time. A great tool to understand current and past pricing trends, which can help determine a future outlook.

Food, gas, and shelter are the top goods we consume daily. According to the CPI, these items comprise about 54 percent of the total. Consequently, these are the primary areas where we’re feeling inflation. When we dig deeper, three other categories make up 21.4 percent of our spending — household supplies, appliances, and clothing.


Although we can’t bring down these costs, we can use this data to reflect on where and how we’re spending our money. Awareness of a problem is the first step to improving. The next step is taking action based on the data. Here we list how to prepare yourself for a long-winded inflationary environment and what you can do to avoid a personal financial collapse:

Analyze Spending

The single best way to control your spending is to create a budget. Most people have made a budget, but many drift away from it over time. A sound budget framework uses a 50/30/20 rule:

  • 50 percent of after-tax income is spent on needs (i.e., food, gas, housing, utilities, etc.)
  • 30 percent of after-tax income is spent on wants (i.e., entertainment, luxury items, etc.)
  • 20 percent of after-tax income is spent on savings & debt repayment.

Many tools exist to help track your spending. Find one and use it. To maintain a healthy, realistic budget, you must follow every dollar and categorize it into your budget. This is how we determine the best way to spend our money or where we can cut.

Round Down

It’s harder to part ways with physical money than swiping a card. The cash becomes tangible and gives us an extra mindful eye on our finances by choosing to spend it or not. 

One good tactic is to take out 30 percent of “wants money” in cash. At the end of each day, set aside any coins or loose dollar bills. A good old-fashioned piggy bank would do the trick. Over time, that stash will build up and will add to your savings or even help pay down that high-interest debt.

Set Savings Goals

Whether your goal is to build up an emergency fund or tuck away for retirement, it’s essential to set a goal and take action to achieve it. This goal needs to be incorporated into your budget to ensure it’s sustainable, but once this is completed, you can automate the savings. Most banks have an online option to make automatic transfers to your savings account. The set it and forget it approach takes the money out of sight so that you won’t miss it as much.

A longer-term savings option is investing in a CD or money market account. These have higher yield rates and build up your savings more over time. Talk to your bank to see if they offer either and what your potential return would be.

Pack a Lunch

Few things gobble up expenses than going out to lunch every day. Most of us can’t wait to take a brief lunch break from work which is understandably so. How often are you packing your lunch?

Restaurants charge a near 300 percent markup on the food they prepare. With food costs skyrocketing, this cuts deep into our budget. Grocery shopping for the best deals and preparing lunches for the week can save dollars and often lead to healthier eating.

Pay Off High-Interest Debt

Inflation is problematic for all of us. Carrying high-interest debt exacerbates that pain. Call a professional if you’ve already gone through the above steps and racked your brain on a sustainable budget that feels unachievable. Advocate Debt Relief can help you find a path you may not have considered. You deserve a win. Take your first step toward financial freedom and contact us.

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