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April 5, 2022

The last time you went to the grocery store, did you wince when you realized how all the price increases you saw on the shelves added up on your final bill? How about when you filled your gas tank? Or ate at a restaurant?

It’s no secret that prices are going up. The national inflation rate is 7.5%, and fuel costs are a huge part, increasing nearly 40%. Hawaii has always had higher prices than the mainland, so these price increases put us way over the national averages.

What can you do to reduce the impact of inflation on your budget?

Cut Corners

When a standard gallon of milk is nearing $7, and other prices are hitting record highs, it can be hard to justify spending extra for name brands instead of store-brand items. And that’s okay. Food costs make up the bulk of a family budget, so it’s all right to look for lower prices and scale back on higher-priced groceries.

One place to cut back on is produce. Here in Hawaii, we are lucky to have access to many fruits and vegetables considered exotic on the mainland; however, there is still tremendous variability in the prices of different produce items. Consider focusing on the more affordable items and leaving the expensive fruits and vegetables until prices return to reasonable levels. Also, consider some less conventional alternatives than the grocery store. Take time to visit the swap meet to find lower-cost produce.

Meat is also likely to be a significant portion of your grocery bill. You can lower the costs by using cheaper cuts and reducing serving sizes. If you’re having family and friends over to grill for a party, try to focus on meatless meals the days before, so you can still afford to serve your regular spread of seafood, short ribs, and steak.

Consider Leaving the Car at Home

With gas prices at nearly a dollar more than the national average, the more you can avoid driving, the better for your pocketbook. The bus is always an option, but carpooling can be more convenient. For example, if you and a co-worker who lives near you take turns driving, you can both save on gas while keeping your schedule how you want it, not when the bus runs.

When you do need to drive, plan your route and combine errands in one trip to be more efficient. If you’ve got a doctor’s appointment, for instance, consider stopping at the grocery store on the way. And if you’ve been going to a stand-alone pharmacy, think about moving your prescriptions to the one in your grocery store so you can combine trips.

Finally, delivery can help reduce the number of trips you need to make. Mail-order can save you trips to the pharmacy if your insurance covers that service. (In fact, sometimes you can lower your co-payments by choosing to use your insurance company’s mail-order pharmacy so that you can save even more.)

Put Off Big Purchases

Prices on new and used cars have skyrocketed, and cars, trucks, and other big purchases have long waiting lists. If you can avoid a big purchase, consider waiting until inflation stabilizes and supply chain issues have subsided. If you have to wait 12 weeks for something to arrive, why not wait until it’s actually available before shelling out the cash?

Although some inflation is standard, many of the increases in costs are related to the supply chain and may be temporary. If you wait this price shock out, you might save quite a bit on your large purchases.

Get Your Budget Under Control

If you haven’t been working off a budget, now is the time to start. The sticker shock you’re feeling every time you go to a store, restaurant, or other business can make you feel like your finances are out of control. Get them under control by creating a budget that will help guide your buying decisions.

Gather receipts and see what you have been spending recently in your main budget categories. Consider your fixed and variable expenses. Where are you spending more than you’d like? How can you cut back on spending in those areas without feeling restricted?

Once you’ve set your spending goals, that will help guide you in making decisions. You’ll immediately know whether you can afford that expensive gift you’ve been eyeing, whether it’s time to make significant changes to your grocery or restaurant spending, or how to fund or increase your emergency fund. (And yes, this is an excellent time to build an emergency fund if you don’t have one. Inflation can make emergency expenses hit harder, so the more you can save to cover unexpected issues, the better.)

Learn to DIY

If there are minor repairs around your home, consider learning to fix them yourself rather than getting on the waiting list for a handyman or contractor. YouTube is an excellent resource for minor plumbing, HVAC, and other repairs, with step-by-step walkthroughs and visuals to make sure you’re on the right track. Of course, you may run into complex repairs best handled by a professional. In that case, you may know a friend or family member who does that type of work and could fit your repairs in on the side over the weekend.

A garden is another practical DIY project. If you’ve been thinking about growing some of your own vegetables, this is a great time to start. Set up some pots with your favorite vegetables, and get ready to harvest in a few months. Berries can also be a quick crop to grow.

Inflation hits hard, but you can minimize its effects by making some quick changes and long-term plans and learning new skills.

Schedule an appointment with us for guidance on your budget or other financial goals.