Inflation has been a buzzworthy topic, given how it’s been triple its usual rate for the past couple of years. Luckily, it has deflated slightly, falling to roughly 5% this year.
Unfortunately, that’s still more than double what inflation usually is. What’s worse — that’s just the national inflation rate, which doesn’t always reflect the prices you might pay at home. Depending on where you live, you could still be dealing with record-breaking inflation every day.
What is Inflation and How Does it Affect Your Budget?
Inflation refers to how much prices of goods and services rise over time. Economists track these increases through the consumer price index (CPI), which lists the typical cost of things in your budget.
When you check the CPI, you can see how much prices have risen from one year to the next. On average, most people are spending 5% more today than they were last year. However, some cities and states are stuck at staggering rates as high as 12%.
Inflation Steals Money Away from Savings
With everything costing more, it takes more money to run your household. That money has to come from somewhere, and for most people, it’s their savings. They might cut their usual contributions in half — or halt them entirely — to afford inflation.
Hitting pause on your emergency fund for a month or two won’t make much of a difference. But inflation has been putting the squeeze on your budget for years now. That’s a lot of money potentially not being saved. There’s a chance you could even use older savings to pay for bills and groceries.
Handling the Unexpected without Savings
Without savings, you don’t have a cushion to fall back on when the unexpected happens. Like if you accidentally rear-end someone, and you can’t afford your car insurance deductible. Or you get sick, and the prescription is more than you can handle right now.
In these emergencies, an online personal loan can help you handle unexpected expenses. Going online cuts down on how long it takes you to find and apply for your loan, and depending on your lender, how quickly you qualify, too.
But let’s back up — you should have some things in order before you apply. You should check with your budget to ensure you can pay everything back on time. On-time payments are a non-negotiable aspect of managing your loan. If your budget shows you can’t afford your payments, start searching for an alternative loan or lender.
Do What You Can to Sock Away Savings Despite Inflation
While an online personal loan can help in an emergency, it’s no match for inflation. These higher-than-usual prices will last for the rest of the year, so you need to figure out how you can naturally save more than you are right now.
For that, you’ll need to sit down with your budget and find out what you can afford to cut from this spending plan. You’d be surprised by how the little things add up — from cancelling subscriptions to building a meal plan around coupons and flyers.