What is Inflation and How Has it Affected People?
Inflation is defined as an increase in the general price level of goods and services in an economy that erodes purchasing power for consumers and businesses. There are two different types of inflation:
● Cost-push inflation, which occurs when the soaring price of input goods and services
increases the final price of goods and services.
● Demand-pull inflation, which occurs when the demand for goods and services exceeds
the economy’s ability to produce them.
As a result of inflation in 2022, many people have decided that they want to lower their expenses as much as possible. The biggest question that remains is: how? Some couples have taken extreme measures to save by delaying parenthood, which is estimated to be $300,000 per child during inflation. The New York Times conducted a survey which revealed that 64% of
people who made the decision to delay parenthood listed the cost of child care as their main reason. Whether you have children or not, the best thing to do during inflation is to create a budget and stick to it.
Tips for Saving
In order to save successfully, you should first review your financial plan. This means assessing how much you already spend on the daily and preparing for future expenses, such as having a child or purchasing a home. When there aren’t any surprises in your finances, you can have money already set aside. Of course, everything cannot be predicted ahead of time, but remain diligent with what you can. Another way to save successfully is to ensure that you’re only spending money on things that are a necessity.
Unfortunately, saving will require sacrifices. Even if there’s a great sale going on at Macy’s, try not to indulge unless it’s beneficial in your everyday life. More sacrifices can include unnecessary subscriptions to streaming services, eating out at restaurants, and delaying big purchases. Last but not least, an efficient way to save is by using a specific strategy. For example, if you want to save $5,000 in 3 months, save $385 a week. If you want to save $5,000 in 12 months, save $97 a week. It all depends on what works for you and your current goals. Also, set up your bank account to where a certain amount is automatically transferred to your savings on payday.
The Key to Financial Freedom
If financial freedom is your end goal after saving, it will require a lot of discipline. Financial freedom probably seems impossible during inflation, but there are some important things to remind yourself during this time:
1. Stop impulse shopping.
2. Make sure you’re not living beyond your means.
3. Do not buy things to impress others, buy them because it’s a necessity.
4. Try your best to always have an emergency fund.
5. Grow out of always wanting the newest item in the store.
Personal Finance Management Tools
If you believe that you’ll struggle when it comes to saving and managing your money, you don’t have to do it alone. There are personal finance management tools out there that will help you in the best way possible. These apps were created with the purpose of studying your financial behavior and helping you make smarter decisions.
Additionally, personal finance management tools eliminate the need of speaking to a financial expert in person. If you prefer to have assistance at your fingertips instead, this is the right thing for you. Banking apps have even started to incorporate this feature, if not already. Stay up to date with who you bank with and take advantage of all options they have to offer.
What Does the Personal Finance Management Tool Do?
If you’re wondering whether or not a personal finance management tool is something you need, the answer is yes. Personal finance management tools have several features that are extremely beneficial, no matter what your current financial situation is. These include:
● Account aggregation: This combines all of your different accounts (credit cards, bank
accounts) and places them in one location, which allows easier tracking of spending.
● Categorization: With this feature, transactions can be categorized and edited in
whichever way you prefer.
● Payment calendar: This will help you break down and plan where all of your money
goes. For example, you can track recurring bills and payments which eliminates the
element of surprise.
● Predictive insights and notifications: This creates the ability for the app to detect spending patterns and inform you on the next best step to take. This is very helpful because someone who’s constantly spending may not be able to pick up on a pattern or see where they seemingly fell short.
Essentially, personal finance management tools assist people with reaching their financial goals at a faster pace. They can also ease some stress that a person may be having when it comes to saving money. With these tools and the proper dedication to getting where you want to be financially, inflation will not be as difficult.