How To Deal With Inflation When You Are Living Paycheck to Paycheck

A couple is carefully studying their financial status.
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Inflation has hit Americans where it hurts most: our wallets. Though inflation looks like it’s cooling down, it’s still untenable for families who are barely getting by — and that’s a lot of families. According to a recent report by LendingClub, 61% of Americans were living paycheck to paycheck in April 2022 — up from 52% in April 2021.

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Dealing with inflation while living paycheck to paycheck isn’t easy, to say the least, and one just scraping by has to wonder: How do I meet my needs during inflation when I was already struggling before? 

GOBankingRates consulted finance experts for their best tips on how to deal with inflation when you’re living paycheck to paycheck.  

Make a Spending Plan You Can Follow 

“Take into account a spending plan you can follow,” said Levon Galstyan, a CPA at Oak View Law Group.

“For instance, the 50-30-20 budget designates 50% of your take-home pay for necessities like rent, mortgage and food. Twenty percent goes toward paying off debt and investing, while thirty percent is allocated to desires like going out to dinner. It gives you a built-in cushion so that, in the event of an emergency, you may utilize your savings to pay for it. When making your budget, you should begin by outlining your profits before subtracting your costs.”

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Deal With ‘Icebergs First, Deck Chairs Second’ 

“Most people focus on the small expenses in their lives in hopes that they will move the needle,” said Brent Weiss, CFP, ChFC, co-founder and chief evangelist at Facet Wealth.

“While small expenses are important to track as they can add up, the reality is that the larger expenses are the ones that can have the greatest impact and improve our quality of life or sink our finances. Start with the big three expenses (housing and utilities, transportation and food) and look for ways to save money. Can you lower your utility bills? Can you cut back on driving or carpool? Can you make food at home and dine out less? Examine the bigger ticket items first and then look at your daily habits to really lower those monthly expenses.”

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Streamline Your Mortgage Costs

“Your mortgage may be one of your most significant out-of-pocket expenses,” said Steve Wilson, founder of Bankdash. “How can you decide whether refinancing is advantageous? First, consider the rates you could be eligible for based on your income and credit score. Compare it to your current interest rate after that. You may do the calculations with the aid of a mortgage refinancing calculator.”

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Wilson continued, “Next, consider how long you intend to live there and how much closing costs would cost if you refinance your mortgage. Refinancing could be advantageous if you intend to live in the house for at least long enough to reach the break-even point, which is the point at which the interest savings exceed the closing expenses.”

Take a Look at Your Taxes 

“Three out of four Americans get a tax refund and the average refund comes in at over $3,600,” said Weiss. “While a refund certainly beats owing money to Uncle Sam, the average family is lending money to the U.S. Government, interest free, for months. $300 per month can go a long way in shoring up the monthly expenses and/or paying down debt. Take a good look at your taxes to see if adjusting your withholdings makes sense. If you always get a refund or there has been a major life change (like buying a home), you may be leaving a lot of money on the table each month.”

Reduce the Costs of Prescription Drugs

“See if you can reduce your prescription costs,” said Al Kingan, JD, CLU, ChFC with MassMutual. “Ask your doctor if a generic version is available. Use GoodRx or similar services. They can be cheaper than health insurance copays.”

Lower Your Data Plan 

“A recent study found that 90% of mobile users waste money on unnecessary unlimited data plans,” said budgeting expert Andrea Woroch.

“If you have an unlimited data plan, look at your actual usage over the last few months and check plans with your wireless carrier to see if there’s a less expensive plan that matches your actual needs. Another option is to consider alternative providers like Mint Mobile which charges just $15 a month for talk, text and data when you buy 12 months of service in bulk.”

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Review Subscriptions 

“Take a deep dive into your subscriptions and expenses for entertainment,” said Kevin Chancellor, a financial advisor and CEO of Black Lab Financial.

“What I have found, in my own personal budget as well as some of my clients, is that we ditched cable many years ago to save the monthly cost; however, we had so many different subscription services it got to the point where we were paying more than we originally did for the cable service.”

Join a Warehouse Club and Buy in Bulk 

By joining a warehouse club like Costco or Sam’s Club, you can potentially stretch your dollars. 

“You can save a lot of money by buying items in bulk, and using coupons,” said Andrew Lokenauth, founder of Fluent in Finance. “If you have the space for it (freezer, pantry, basement, etc.), it usually works out cheaper per unit. Always buy staple household items in bulk. You can save hundreds over the course of a year. Anything that is non-perishable or has a very long shelf life that you will always need/use, such as toilet paper, beans, rice, flour, canned foods, etc.”

He added, “Buying in bulk not only saves money, but it also creates convenience. You do not have to leave your house as often, and save time and gas money on additional shopping errands or trips to the store.”

Sell Unwanted Belongings

“If, like most, you’ve hoarded things over the years, now might be the time to sell a few things to help add some extra cash to the pot,” said Scott Nelson of MoneyNerd. “You can easily sell things on sites like eBay or Facebook Marketplace.”

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About the Author

Nicole Spector is a writer, editor, and author based in Los Angeles by way of Brooklyn. Her work has appeared in Vogue, the Atlantic, Vice, and The New Yorker. She's a frequent contributor to NBC News and Publishers Weekly. Her 2013 debut novel, "Fifty Shades of Dorian Gray" received laudatory blurbs from the likes of Fred Armisen and Ken Kalfus, and was published in the US, UK, France, and Russia — though nobody knows whatever happened with the Russian edition! She has an affinity for Twitter.
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