In the past few months, it’s been nearly impossible to escape news about inflation. It’s also been equally difficult not to notice the rising cost of, well, just about everything. From groceries to housing, gas prices, and more, inflation has not been kind to our wallets or bank accounts.
Inflation itself can be pretty frustrating and scary to deal with, especially when you have to spend more to live the same, day-to-day life. Let’s explore why inflation is happening now and what you can do to get ahead of it:
What is Inflation?
According to Investopedia, inflation is the decline in purchasing power of a given currency over time. Most recently, the rate of inflation in the US accelerated to 6.8% in November of 2021, the highest since June of 1982, and in line with forecasts.
In short, money becomes less valuable over time as costs rise. Our most common, everyday expenses have seen regular price increases over the years but we’re currently dealing with an unprecedented and historic level of raised prices.
Inflation is an inevitable part of life and a factor that ebbs and flows with changes in the economy over time.
Supply Chain Issues Are Increasing Inflation
But why is inflation happening now? Well, a major factor causing inflation is an imbalance in supply and demand. The ongoing supply chain crisis has impacted many sectors of the economy and continues to cause problems for consumers.
One example is the shipping delays that affected the shipping supply chain during the second half of 2021. Fraught with COVID restrictions, every supply chain step was delayed by lockdowns, sick employees, and lack of inventory. We all can still feel ripple effects in Q1 of 2022, with grocery store shelves emptying faster than ever before.
Another example is the shortage of microchips used to manufacture new vehicles. This shortage has resulted in automakers unable to keep up with the pent-up demand for new cars. Heck, even used cars are at some of their highest price points ever!
Labor Shortages Are Increasing Inflation Too
Another major factor affecting inflation? The Great Resignation!
According to CNBC, a record 4.3 million Americans quit their jobs in November 2021. This trend is continuing even today. People are opening their eyes to the vast majority of job opportunities available to them, and some people are even looking to change careers altogether.
Companies have been scrambling to retain and attract new talent with higher pay and better benefits as a result. Although wage increases can be helpful, they are also a key contributor to higher inflation. Higher wages coupled with a labor shortage means increased costs for companies which, in turn, increases the cost of goods and services for consumers (it’s a double-edged sword!)
All of this to say that the U.S. Federal Reserve System, whose job it is to help curb and manage inflation, has signaled it may have to raise interest rates across the board sooner rather than later. This action aims to fight inflation at all levels and effectively curb the current high inflation rate.
Is Inflation Good or Bad?
Well, that depends. On one hand, it can be considered positive since rising prices might prompt consumers to buy goods sooner rather than later, such as non-perishables, to avoid higher prices later on. Increased demand strengthens the economy overall!
On the other hand, inflation can wreak financial havoc when it gets too high. Periods of sustained inflation historically can put a damper on economic growth by driving up costs for both consumers and businesses.
Ultimately, a healthy balance of supply and demand needs to be met to manage inflation.
5 Ways You Can Get Ahead of Inflation Now
Unfortunately, there isn’t much any of us can do about inflation (trust me, we’re frustrated about it too!) But luckily, there are things you can do now to cope and get ahead financially. Here are five options to consider:
1. Re-evaluate Your Employment Situation
With costs of everyday living rising, from rent, utilities, groceries, and beyond, there’s no time like the present to take a look at your current job and career path. Do you know if you’re actually being paid what you’re worth?
You might be thinking: gee, I’m a hard worker and I’ve been at my current job for some time now. Perhaps a raise or a promotion is in order!
Depending on your situation with your current employer, it might be worth approaching your boss and asking for a salary increase. If you’re not too keen on this approach and have been thinking about looking for a new job anyway, then we suggest you keep your LinkedIn profile up to date and reach out to your professional network. You truly never know what new opportunity you may find!
2. Use Budgeting Tools
It’s always smart to review and modify your budget from time to time. It’s even more important with rising inflation impacting so many of our expenses. So, NOW is an excellent time to review your monthly spending habits.
One of the biggest culprits of overspending are those monthly subscriptions we all have but don’t actually use. It’s easy to use a tool like Truebill, which can find all of the subscriptions you don’t use anymore and cancel them for you with your permission. Suddenly, you could be saving anywhere from tens to even HUNDREDS of dollars each month. It’s a no-brainer!
Budgeting is ALWAYS important, but increasingly so during times of expected and continued inflation. Seeing where you can cut back to account for the higher cost of your current monthly expenses and creating a budget goal that you stick to can help make a huge difference.
3. Start a Side Hustle
A sure-fire way to always ensure that you have enough cash for those increased expenses? Starting or continuing a side hustle!
Harnessing the power of the gig economy and gig work is one of the smartest and soundest decisions anyone can make to earn extra money with flexible work arrangements, allowing for work on your schedule.
My personal favorite side job? Becoming an Instacart or Shipt grocery shopper!
After you sign up for Instacart or Shipt and become a full-time or part-time Shopper, you’ll be able to go shopping for groceries and even get paid to shop. The best part about these gigs is that you can work on your own time, accept only the orders you want right from your smartphone, and you keep 100% of the tips you earn.
A great resource to help you find gig work opportunities like these is the free Steady app; with over 3 million users, there’s no doubt you’ll have success finding work too. Steady members, on average, also make an extra $5,500 a year!
Side hustles can truly be a lifeline when you need extra funds in a pinch, or you just want to position yourself better against the pressures of inflation.
4. Use Cashback Apps
One of the most important expenses we all have? Well, groceries, of course! And the reality is that we can all feel the effects of inflation on our weekly grocery runs nowadays.
Luckily, you can start to earn cash back for many of those items by scanning your grocery receipts with apps like Ibotta and Fetch. A nifty trick is to scan your grocery receipts on both of these apps each time you shop: this means double the reward potential for you!
Once you reach a $20 minimum on Ibotta, you’ll be able to cash out directly to your PayPal account. With Fetch rewards, all you need is a minimum of 3,000 points ($3), and you’ll be able to cash out for a gift card to a retailer of your choice!
It’s important to focus on actually SAVING money and reducing your spending when using these cash back apps. It can be easy to get caught up in spending more money than you should just to see how much more cash back you’ll earn from scanning your receipts. Don’t forget the goal: to save money on your everyday grocery purchases, NOT to spend more on extra items you don’t really need.
5. Use Credit Cards Cash Back Offers to Your Advantage
If used correctly, credit cards can help you fight the effects of inflation as well. Many credit cards offer limited time, cash back rewards on specific retailers. For example, you might be eligible for Chase Offers if you’re a Chase cardholder.
Here’s how you can access Chase Offers from your Chase account:
- Log in to your Chase account.
- Select your Chase credit or debit card.
- View the offers available to add to your card and check them all off. This way, if you happen to make a purchase that applies to an available offer, you’ll see a statement credit automatically applied to your account. I like to think of it as one of those things to set and forget!
- Use your Chase card to pay in-store, online, or through mobile apps.
- You’ll see a statement credit applied to your account automatically in 7-14 business days (it’s like cashback that automatically gets applied to your statement: free money in your wallet!)
Frequent offers include 10% back on Target purchases, up to $9 back maximum, or 5% back on ExxonMobil fuel purchases, up to a $2.50 back maximum.
In short, credit cards offering cash back on gas, groceries, and other essential purchases can really help you save some extra cash and lessen the blow of inflation on your wallet.
The Bottom Line
The COVID-19 pandemic is still here and continues to throw us curve balls in just about every facet of our lives, and a period of higher inflation is an unfortunate reality we all have to contend with. But our takeaway is that it’s not something to fret about but rather an economic reality to deal with.
Reevaluating your employment situation, budgeting, working side jobs, etc. are all effective and viable ways to help you cope with inflation. We hope this helps you feel a little bit less stressed out and a little bit more financially empowered!