By Barbara O’Neill, Ph.D., CFP®, firstname.lastname@example.org
Between a four-decade record high for inflation (9.1% Consumer Price Index over the 12 months ending in June 2022) and rising interest rates as a result of recent Federal Reserve rate hikes, many Americans are being squeezed financially. This is especially true for people with low and moderate incomes as price hikes consume a higher percentage of their pay versus higher-income counterparts.
Many young military families fall in this category and Personal Financial Managers (PFMs) are helping military families cope with increased costs for rent, utilities, food, gas, insurance, and other household expenses. Below are dozens of tips for PFMs to share with clients to help them “claw back” the purchasing power that high inflation and rising interest rates are taking away:
- Shrink Food Spending – Specific strategies include: sticking to a shopping list, buying less food by cutting out “extras,” using newspaper and/or online coupons and double coupons, buying store brands, joining supermarket reward/loyalty programs, cutting and chopping food at home (e.g., fruit, meat, salads), buying and freezing fresh fruit in season, shopping at a commissary and/or warehouse stores, and buying still-good markdown items.
- Change Eating Habits – Examples include: “watering down” juices and drinks with ice or water to stretch supplies, using leftovers promptly to avoid food waste, serving smaller food portions, eating more meatless meals by replacing meat with other protein foods, reducing unhealthy snack foods, stir-frying small quantities of meat or fish with vegetables and pasta (to use less), and reduced consumption of soft drinks and alcohol.
- Accelerate Debt Repayment – In a rising interest rate environment, it pays to reduce outstanding balances on loans and credit cards by making extra payments. Reduced spending can free up money to do this. Two ways to pay off debt faster are the snowball (put extra payments on smallest debts) and avalanche (put extra payments on highest interest rate debts) methods. The PowerPay program can be used to create a plan for either method.
- Inquire About Discounts – Even in an inflationary environment, prices may be negotiable if people simply ask or agree to go through “hoops” (e.g., automatic bill-pay). It never hurts to be polite and ask questions of utility companies, insurance agents, and other vendors. Avoid “yes/no” questions like “Can you lower this price?” and, instead, use phrases like “Tell me about available discounts and other ways that I can save money.”
- Score Free Entertainment – Service members have access to Morale, Welfare, and Recreation (MWR) programs that provide leisure (e.g., bowling) and sports activities, access to military fitness centers, and more. In addition, many communities where military installations are located have free or low-cost public events. There are also many vacation destinations and amusement parks that offer military discounts.
- Adjust the Thermostat – Energy experts recommend an ideal summer thermostat temperature of 78 degrees. If this seems too high for some family members, using ceiling fans to circulate air can help. Also, try a slightly higher temperature of 80 to 82 degrees at night when sleeping (with light pajamas and no blankets) and a setting of 85 degrees when away from home. Comfort needs to be balanced with energy-saving actions.
- Drive Smarter – Consolidate family errands to drive less and use apps to find the cheapest gas. Driving the speed limit also saves on gas. Driving from 60 mph to 70 mph decreases fuel economy by 14% and, from 70 mph to 80 mph, another 15.4% according to the U.S. Department of Energy. Other money-saving tips are paying for gas with cash at gas stations with discounts and joining a retailer’s gas rewards program.
For dozens of additional inflation-fighting ideas, review this article from Rutgers Cooperative Extension.