Inflation rates have decreased, but they still remain quite high. In June of the previous year, inflation increased to 9.1%, which marked the highest level in 40 years. As a result, it has become increasingly difficult to cope with rising prices.
According to a report released in February, a majority of adults in the United States, approximately 62%, are living paycheck to paycheck, which is an increase from the previous month’s 60%.
The report also indicates that more people have taken on a side job or alternative income sources to make ends meet. With the reduction of pandemic-related benefits, individuals have turned to supplemental income to improve their financial situation.
44% of Americans have a side hustle amid inflation, which is a 13% jump compared with 2020, according to a separate survey by LendingTree. Another report from FlexJobs, found that 69% of employed professionals either have a side job or want one.
So, it is evident that regardless of one’s income level, having additional income significantly affects financial security and can be the deciding factor between living comfortably and struggling to pay bills and living paycheck to paycheck.
What can you do to improve your financial picture?
To combat the effects of inflation, there are several steps you can take to manage your expenses and savings without relying solely on earning more money.
1. Refresh your budget. First, take a look at your budget and see where you can make cuts or negotiate with current providers to lower your monthly expenses. For example, increasing your auto or homeowners insurance deductible can result in a lower monthly premium.
2. Purge useless services. Eliminating recurring expenses such as unused subscriptions or memberships can also free up some cash. Reviewing your expenses regularly can help you identify areas where you can save money.
3. Clear up debt. Carrying credit card debt can be particularly expensive with interest rates over 20%. If you are struggling to pay off a balance, consider switching to a 0% balance transfer card that may offer up to 21 months with no interest. Paying off credit card debt should be a priority as it can save you up to 20% of your expenses.
4. Tidy up your financial profile. Tidying up your financial profile can also help. Consider transferring your savings to a high-yield online savings account to earn a better interest rate. It is also important to check that your bank is not charging monthly maintenance or service fees for overdrafts or insufficient funds.
5. Change your spending habits. Finally, changing your spending habits can help you reduce the amount you spend. Avoid impulse purchases by turning off sale notifications in store apps, unsubscribing from retail newsletters, and avoiding browsing in stores unnecessarily. By making small adjustments to your spending and saving habits, you can better manage the effects of inflation and improve your financial stability.
