3 Easy Ways to Protect Your Budget from Inflation

Is inflation causing you worry? Find out how to protect your budget from inflation in 3 easy to follow steps!

Prior to 2023, the biggest financial concerns among consumers were unexpected bills and then the pandemic. But here we sit, with inflation consistently rising, while our income stays the same.

You might ask, how is this sustainable?

Well, to be frank it isn’t. Currently, our inflation rate has risen to 1.23% in 2020, 4.7% in 2021, a whopping 8% in 2022, and now 4.05% in 2023 [1].

To put it another way, to match inflation, for every dollar you had, you needed to have $1.50 in 2020, $1.57 in 2021, $1.70 in 2022, and now $1.77 in 2023 [1].

Overall, to match inflation, you would need to receive an income increase of at least $1,600.

But most employers aren’t handing out increases left and right because inflation is affecting them too.

So, what can you do to make sure inflation doesn’t break the bank for you?

1. Focus on Smart Spending and Budgeting:

Smart Spending

As you already know, we are continuously bombarded with advertisements no matter where we are.

My son and I once played a game while we were driving and we marked over 40 advertisements just along a 5 mile stretch of road. Now, add in the ads online, on tv, on the radio, at the store, etc. The whole intent of the ad (as you already know) is to entice you to purchase whatever product they are selling.

And BOY ARE THEY GOOD!

There is something called consumer scienced, that tells companies exactly how to manipulate their customers into buying a product. That is why, it can be so difficult to break bad spending habits.

I tell you this to say, be careful how you are spending your time and your money. If you go “window shopping” just for fun, you are bound to end up buying something.

So, find other things to occupy your time. Take up a new hobby or find an activity that is low to no cost that will keep you from spending unwisely.

Another way to reduce your spending is cooking at home. It’s a super simple way to save money and control your spending.

Let’s put it into perspective really quick, the average American household spends $x each week on groceries and $x on eating out. That equates to an extra $x each month (or $x each year) on food.

If you were to put that money back into your budget it would save you $x in just 5 short years.

Budgeting

If you don’t already have a WRITTEN budget, you are missing out! While it is good to have a roundabout idea of what your expenses are each month, it does not compare to writing out your income and expenses, and then tracking your spending. This gives you a clear picture of how much money you really have to work with, how much you’re actually spending, and how much you can afford to save.

I know budgeting can seem overwhelming if you’ve never done it before and don’t know where to start, but I’ve got you covered.

Click the video below to watch a short tutorial.

Now that you have an idea of how to create a budget, the most important thing is sticking to it. It is pointless to have a budget if you do not follow your own plan.

This means sitting down every week and looking over your budget categories, your income, and your transactions to ensure that you are on track to meet your budget goals each month. This also allows you to identify any problem areas, or unexpected expenses and adjust your budget accordingly.

Trust me when I say, there is nothing worse than getting to the end of your income before the end of the month…if you get my drift.

2. Build an emergency fund

After you’ve created your budget, the next thing you need to do is to build your emergency fund.

An emergency fund is a necessary part of your financial journey. It protects you in the event of any major emergencies so that you don’t have to fall back on credit cards, personal loans, or family members.

I recommend having at least $1,000 as a start for your emergency fund, but depending on your financial health and situation, you may be able to raise the bar.

To find out what type of emergency fund is best for you, check out this blog post “How to Break Free from Financial Disasters in One Easy Step”.

With that being said, I totally understand when there just isn’t enough money to save after you’ve paid all of your bills, fed your kids, and warmed your house. If you’re in this situation, you need to increase your income.

3. increase your income

Now, increasing your income is not just for those without the financial resources to save extra money. Finding ways to increase your income is beneficial to everyone and will lead to financial success later on.

So, how can you increase your income?

SO MANY WAYS!!

• Consider how you can leverage a raise at your current job
• Apply for a promotion or higher position at your current company
• Add a side hustle (or two)
• Sell something
• Build a side business
• Get a second job
• Take up extra hours at work
• Provide a service (babysitting, house cleaning, dog walking, etc.)
• Utilize Social Media (anyone could become an influencer)
• Start a blog

I could go on and on but the point is, in 2023, the ways to increase your income are endless!

But the most important thing, is that you are able to bring your head above water, untie the weights around your ankles, and finally climb into a nice, secure, and leak free financial boat.

Ultimately, we cannot control inflation, but with the right financial planning and strategy, we can ensure that we aren’t caught blindsided.

So, to protect your budget against inflation, make sure you:

• Have a written budget
• Control your spending
• Build an emergency fund
• Increase your income

Above all, put your faith and trust in the Lord God Almighty, as He is truly the one who gives increase.

“As for every man to whom God has given riches and wealth, and given him power to eat of it, to receive his ^[a]heritage and rejoice in his labor—this is the gift of God.”

– Ecclesiastes 5:19 [NKJV Bible]

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Footnotes

[1] “$1 in 2000 → 2023 | Inflation Calculator.” Official Inflation Data, Alioth Finance, 13 Jun. 2023, https://www.officialdata.org/us/inflation/2000?amount=1.