The Best Way To Fight Inflation: Budgeting
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Etta Money, President & CEO of InCharge Debt Solutions.

The Consumer Price Index hit a 40-year high early this year. Consumer anxiety is also off the charts, and it might be affecting your business in more ways than you think.

Consumers are workers, and an anxious workforce is a less productive workforce.

These days, lunchroom conversations and coffee breaks regularly turn into stress sessions over inflation. The anxiety is rooted in a sense of helplessness. There’s just not much the average U.S. worker can do about supply chain breakdowns, oil embargoes, federal monetary policy or war.

There’s not much the average CEO can do, either. That doesn’t mean it’s impossible to ease at least some of your workforce’s angst. A little help and encouragement on ways to cope with these inflationary times would be welcome.

For example, did you know that less than half of the general population uses a budget? That’s no way to run a business or a household.

Making a budget obviously won’t solve everyone’s money problems, but consumers feel as if they are in a war for financial survival. Merely having a battle plan will make it easier to cope with an inflated economy few Americans have experienced.

Gas prices increased 48% over the last year. Energy costs went up 32%. Food was up 8.8%. All that explains why U.S. households were spending $296 more per month on average, according to a Moody Analytics report.

It also explains why two-thirds of Americans are experiencing financial anxiety, based on a survey from U.S. News & World Report. They are rethinking plans to buy everything from houses to new shoes to popcorn at the movies, if they even have money to see a movie.

Economists say inflation may peak midyear. Even if it does, the cost of living isn’t going down anytime soon. Neither is the amount of lost sleep among workers. You can help by setting up in-house programs with tips on budgeting or partnering with financial counseling agencies.

If research can give an indication of the larger population, 56% of the people surveyed have only a rough idea of where their money goes—meaning they don’t currently have a budget. Simply learning the basics of budgeting—tracking your income and expenses—can be eye-opening and empowering.

Constructing a budget comes down to “needs” and “wants.” The basic needs are housing, transportation, food and electricity. The wants are things like eating out, pedicures and Netflix.

That dichotomy seems obvious, but it can be enlightening to people who’ve never tracked their monthly expenses. Here are some specifics you can provide to your employees:

Get a membership at a warehouse club like Costco or Sam’s or BJ’s. The annual fee is about $60, but that can be quickly made up with all the bulk buying. Gas typically costs 15 cents to 75 cents less per gallon. That alone could save hundreds of dollars over 12 months.

Subscriptions, credit cards, gym memberships, cell service, insurance premiums are recurring costs that can be negotiated down. Simply inquiring about a lower rate and threatening to transfer your business elsewhere will often get you a better deal.

Defer unnecessary purchases. Unless your car is falling apart, don’t consider buying another one in 2022. Prices for new cars increased 12.2% last year and used-car prices went up 40%. The trend is expected to slow this year as supply chain problems ease and more inventory becomes available. That should lead to moderately lower prices.

Plan before you purchase. That’s good advice on any shopping spree, but it can really make a difference at a grocery store. Scour websites and newspapers for coupons, and use them wisely. Don’t buy something you don’t need just because it’s a great deal.

There is plenty of other money-saving and money-making tips, like carpooling, getting a roommate and minimizing restaurant expenses. Belt-tightening is not fun, but setting goals is motivating. It gives the belt-tightener a feeling they can help themselves.

When it comes to money, there’s not much good news on the immediate horizon. Getting on a budget not only makes financial sense for workers, but it also makes emotional sense. Those results are hard to quantify, but chances are they’ll show up in your bottom line.

The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. Do I qualify?

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