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Inflation has been rearing its ugly head for months. At its peak in June, the Consumer Price Index, the government’s main gauge of inflation, rose 9.1 percent compared with June 2021, according to the U.S. Bureau of Labor Statistics. On Dec. 13, the government reported that the CPI had gained 7.1 percent over the 12 months ended in November.
In response, the Federal Reserve has been raising interest rates to cool off consumer demand, reduce inflation — and avoid a recession.
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While inflation dipped slightly in September and October, the Fed’s target of 2 percent is likely to take time to hit. Unfortunately, the latest survey of economists by The Wall Street Journal has forecast a recession for 2023. Employers may cut jobs as the economy contracts.
What to do? Look for painless ways to cut expenses. Asking for senior discounts, if you qualify, is obvious. But there are many other things you can trim without affecting your lifestyle, says Ken Waltzer, a certified financial planner at KCS Wealth Advisory LLC in Los Angeles. You can still have your vanilla lattes — but not every day.
Here, financial planners from around the country offer practical suggestions for shaving $100 or more off your spending each month. Then, you can divert some freed-up cash to your emergency fund. You’ll be in a stronger position, should the U.S. economy dip into a downturn in the new year.
1. Get a grip on groceries
Create a weekly meal plan that you can display on a whiteboard on your refrigerator, says Nadine Burns, a CFP at A New Path Financial in Ann Arbor, Michigan. “Now, make a list of the ingredients you’ll need for your shopping trip — and stick to it. You’ll save money, and your older children or partner can start meals before you get home from work.”
Paying with cash will also help you to buy fewer items. Pick up your order curbside and you won’t be tempted by store promotions. Shop at different stores, says Nick Covyeau, a CFP at Swell Financial Inc. in Costa Mesa, California. “Look for better deals.”
Buy in bulk the nonperishable items you use regularly, says Waltzer. “You can get canned and paper goods, for example, in larger quantities at lower per-unit prices. You have the added benefit of buying before the cost goes up again.”
2. Excise your excesses
Dining out, ordering take-out food and using subscription meal plans may simplify your life but complicate your budget. “I've had clients spend over $1,000 per month just on take-out,” says Nicholas Bunio, a CFP at Retirement Wealth Advisors in Berwyn, Pennsylvania.
Examine your credit card and bank statements to determine how much you’re spending on indulgences, says Crystal Cox, a CFP at Wealthspire Advisors in Madison, Wisconsin. “Do you stop at Starbucks for coffee every morning? Just $5 a day, five times a week equals $100 a month.”
3. Shut down your shopping
It’s always good to get a bargain — unless you’re an impulsive spender. Do “flash sales” online for clothing, shoes and tech stuff grab your attention? If so, learn to ignore them. If you can’t ignore them, get rid of shopping “triggers.” Cancel notifications of price drops from your favorite retailers. Delete your product subscriptions on Amazon that deliver your favorites at intervals during the year. Buy only what you need and what your budget allows.