There is no “cure or quick fix” for inflation, but there are many tactics and actions seniors can take to help lessen the problem and to hopefully avoid having their budget busted because of it. Below are discussed some of the best of these tactics and actions.
The media is full of stories about inflation, but this is almost always about inflation on a national level. Just like the general cost of living varies from place to place, so does the rate of inflation. If you are living in an area which already had a high cost of living, plus it is now getting hit by significant inflation, you may soon find your budget busted. If you are not significantly tied down or attached to your current location, you should consider moving to an area with a lower cost of living and inflation. Remember, your social security or other pension benefit payments will remain the same no matter where you live – but such a move will cut (sometimes by a great amount) your expenses.
If you have any significant amount of savings in non-interest bearing accounts, inflation can make the value of this money shrink away over time. There are various investment options that are relatively free of risk, such as bank certificates of deposit (CDs), local and federal government bonds and others. Even if the interest they pay is less than the inflation rate, it will help preserve your money. Talk to a trusted financial advisor about the best options for you.
Just like you want to collect interest on your money as discussed above, you should avoid or minimize any interest you pay out. The usual culprit here are credit cards, mortgages, car loans and other debt payments. Some suggested tactics regarding these are:
– Credit Cards: Almost all credit cards are now with variable interest. That means as inflation goes up, so does the interest rate and your expense. A good credit card will allow you a certain grace period where there is no interest charged by paying your bill in full. This is something you should strive to do on a regular basis. If your current credit card(s) don’t offer a reasonable grace period and/or have a high interest rate, consider switching to a more favorable credit card.
– Mortgages: If you are still paying a mortgage on your home, it is very important to try to reduce your interest expense, because on a mortgage it is a large amount of money. You can try to refinance your mortgage to fixed interest rate if your current one is variable; by paying half of your monthly payment every other week you will save interest expense; and if possible try to pay-off all or most of the existing mortgage balance.
– Car and other loans: It is a good idea to get rid of these by paying them off in advance, especially if these loans have a variable interest rate.
– Use of Credit: If you find yourself needing credit, a good idea is to try to get a new credit card with an introductory offer of zero percent interest for a certain amount of months. Some credit cards offer even a year of zero interest, allowing you to make payments without incurring interest expense. If you can make sure you can pay off the balance in that time, this is a better option than taking on a new, regular loan with interest.
Food is usually the largest on-going expense for any household. Unfortunately, food has been subject to the ravages of inflation. Since eating is not an optional expense, buying food in a smart manner can help.
– Always make a shopping list and stick to it – don’t buy on impulse. However, if a food item that you regularly buy is on sale, then buy as much of it as you can and store it, as much as possible.
– Buying in bulk sizes from warehouse membership stores will save you money, especially for non-perishables such as canned and packaged products.
– Perishables on sale can be cooked, portioned and then frozen for future use.
Try to eliminate and reduce expenses as much as possible: Do you have the most affordable and necessary cell phone, internet and cable TV plan? Are you air conditioning or heating your whole house while spending all your time in only one or two rooms? Have you asked for and received any senior discounts from any company you buy from? Are you shopping in the most affordable shops possible or just buying out of habit? Remember the old adage that applies here – a dollar saved is like a dollar earned, and these saved dollars can really add up.