Whether you’re looking for millennial-specific budgeting ideas or ways to save money during inflation, these creative cost-cutting solutions can help you stay ahead of your finances.
1. Identify wants versus needs
One of the best ways to save money – especially when it comes to non-essentials – is not to spend it in the first place.
If you have trouble identifying wants versus needs, make a rule for yourself, like the 30-30 rule: if the purchase is over $30, wait 30 hours before buying it. The Minimalists’ Joshua Fields Milburn adopted this rule years ago to help curb impulse buying.
If you still love the idea of your desired item after waiting, then get it! However, you may save more money by skipping impulse buys or finding an alternative.
2. Save money while grocery shopping
Tiffany Knighten, the CEO at Brand Curators, shared her best hacks for saving money while grocery shopping during inflation. Here are her recommendations:
- Plan meals around ingredients that are in season.
- Make a shopping list and stick to it.
- Buy in bulk when items are on sale.
- Avoid shopping when hungry.
- Compare prices at different stores and choose store brands.
- Use coupons and discounts $3-$5 can add up quickly!
- Avoid pre-packaged or processed foods.
- Buy fresh produce from local farmers’ markets.
- Keep track of what’s in your pantry before shopping.
3. Cut unnecessary expenses
Call your insurance, credit card company, or loan servicers, and ask for reduced rates, hardship programs, or alternative payment plans.
Cancel subscriptions you no longer use and look for low-cost or free alternatives. Take advantage of free streaming services (like Sling, Tubi, Roku, or Freevee) to save an extra $8 to $20 monthly. Reducing expenses can help reduce lifestyle inflation, the tendency for your spending to increase as your income does.
4. Add in some additional income streams
Sometimes the underlying problem is a cash flow issue. Try adding new income streams into the mix. For starters, you can sell unwanted or unused items on online marketplaces.
You could also start a side hustle or grow some passive income opportunities. Just stick to a budget while you side-hustle so you don’t end up right back where you started!
5. Build up an emergency fund
Remember to save for a rainy day, says Harry Turner, Founder of The Sovereign Investor and former hedge fund manager.
“The first thing to do to inflation-proof your budget is to build up an emergency fund, with a goal of having three to six months’ worth of living expenses saved away in the case of financial hardship or job loss.”
How can you do this? “Trim the fat from your budget and prioritize essential spending—food, housing, transportation—over discretionary spending like entertainment, hobbies, clothes shopping,” Turner says. “One great way to save is by automating transfers into separate savings accounts each month as part of your budgeting process, so you don’t even have to think about it.”
6. Pay off high-interest debt first
According to Turner, building strong credit and increasing cash flow is crucial during inflation. “Pay off debt before borrowing more; reducing existing debt will reduce interest payments and help free up cash for necessary purchases.” Whether you use the snowball or avalanche method, get those balances down quickly!
“Research different loan options that can help lower overall loan payments or extend the repayment timeline if needed during tough times ahead,” he added. “Any additional money coming in should go directly towards your emergency fund or pay off existing debts.”
7. Invest in your future
What about investing? Turner says you can’t miss this step because investing wisely helps you weather financial storms.
“Aim for inflation-adjusted investments that are designed specifically handle fluctuations in prices over time (like I-bonds), and diversify your portfolio across different asset classes and sectors that may help hedge against market volatility.”
He shared, “The key here is to be mindful about not putting all your eggs in one basket – even taking small steps such as regularly making contributions into an IRA account with different types of investments can help you ride out market cycles until things turn around again.”
8. Pay off high-interest debt first
Michael Ashley Schulman, Chief Investment Officer at Running Point Capital Advisors, recommends paying down high-interest rate debt like credit cards “before the rapidly compounding debt swamps any attempt to build up savings.”
As an alternative option, he advised that “if you are locked into a relatively low-interest rate loan like 3% on a home mortgage or 4% on an auto loan, inflation can be your friend as it depreciates the values of the underlying debt.” It’s all about leveraging debt in your favor and avoiding bad compounding interest.
