COSTS ON THE HORIZON
Even if you don’t follow the news or subscribe to a nifty podcast for your worldly updates, you have likely felt changes happening within your wallet. The chicken you’ve been ordering through the pick-up app at your local grocery store may have been your first tip. Some of our essentials have started to greatly increase in cost.
If you follow economic news, you may have heard about the market changes driven by concerns of inflation and what that means for interest rates. If that prior sentence meant nothing to you, don’t worry. Inflation is simply this: the increase in the price of goods and services.
Inflation has risen rapidly to levels we have not seen in 40 years. Economists debate about what the main cause is, but continued supply change issues can be one of the reasons. Less products on the shelves with steady demand will drive prices higher. We heard about the limited supply last year with lumber and then computer chips. If you were doing any project work with lumber last year… you know exactly what we’re talking about. Prices for a single board were incredibly high during the first part of the summer, but came down drastically towards August. Another example is still in action. Limited computer chips have led to fewer cars being produced. This drove up the price AND demand of new and used cars. You are now seeing more empty shelves at the grocery stores and paying significantly more for a gallon of gas. All in all, inflation has risen over 7% on a year over year basis. Simply put, if you bought something for $10 last year, you would now be paying approximately $10.70 for that same good.
Ultimately, what does this mean for us? Well, it may be a good time to sit down and review your spending patterns and be ready to make some adjustments. For example, last summer you could fill up a vehicle for just around $50… now, it’s close to $75 for a full tank. If you fill up a vehicle at least 2 times per month, that is an extra $50 coming out of your budget. This same example can be used for your grocery bills, going out to eat, and even energy costs.
No one knows when inflation is going to come back down to historical levels (approximately 2.75% annually.) If you want to keep your savings and investment goals on track, despite any changes that may come, here are a few recommendations to your regular household habits. First, take some time to plan your trips around town to minimize the amount of gas you are consuming. Second, make a grocery list to prevent impulsive buys in the store. And finally, try reducing the thermostat to save a little on your energy bill. If you’re looking for a new additional tool, sign up for ChangeUP and save each time you swipe your debit card. (You can set it to go into an emergency savings account!)
Small adjustments like these can help reduce the pain of rising costs of goods and services. That way, you can also stay on track with your short term and long-term savings and investment goals.
(Haven’t set any goals yet? Want to simply chat about it? Reach out to Dana McVey or Noe Smart on our Financial Solutions crew at 920-494-2828!).