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When Your Income Cannot Keep Up With Inflation

  • Annetta Jones
  • June 17, 2022

When Your Income Cannot Keep Up with Inflation

Set Spending Priorities

As you and your family are faced with the high cost of inflation, you’ll need to develop a plan to help you meet your expenses. It’s important to look realistically at the situation and actively seek solutions to the new cost of customary expenses.

Update, or create for the first time, a budget (AKA a spending plan). It should reflect a best estimate of anticipated changes in your income and expenses for the next few months as a result of inflation.

 

Start by listing what money is available. Do you have cash on hand? Unemployment income? Food stamps? Money from side jobs? What is the total amount of money that will be available to use for expenses?

Next, list all of your expenses and when they are due. Prioritize your expenses. What needs to be purchased and what are things that are able to be delayed if necessary?

  1. Keep a roof over your head. If inflation has impacted your ability to pay your mortgage, you must contact your bank or mortgage company and ask them what relief is available to you. If you make a late or reduced payment without contacting the bank, those payments will be reported to the credit bureaus. If you establish a new payment plan, you will need to follow through on the new plan to keep your credit history in good shape.
  2. Make sure you have food and necessary medicine. These are both necessities. Contact your doctors if you are having trouble paying for your prescriptions, they may be able to offer a cheaper medication or direct you to a medical program that can assist with the cost.
  3. Keep the utilities going. Contact your utility company and ask for assistance if you are having trouble paying the bill.
  4. Loans and credit. Contact your lender if you have car loans, student loans, or credit cards that you cannot pay. Many lenders can offer some relief.

When Inflation Affects Your Spending

  • Figure out how much you can spend.
  • Keep track of how much you are spending.
  • Decide what you can eliminate or substitute if necessary.
  • Work with creditors to pay bills.
  • Explore ways to increase your income.

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