Inflation is rising above its highest rate since 1982, according to the Consumer Price Index. ACC experts share what’s happening and steps you can take to stay financially stable.
Written by: Karen Serna, Student Money Management Office Director
No doubt you’ve noticed it at HEB or when filling up your gas tank: Things have gotten more expensive. You’ve probably also seen headlines citing rising inflation, and you might be wondering “Will prices keep going up?” and “How do I handle this?” Let’s dive in!
What is inflation anyway? Inflation is when $1 doesn’t buy what $1 bought last year. Inflation is usually working in the background, and we seldom realize it’s there until there’s a huge jump, like we’re experiencing now, or until we look back at historical prices and see that a cup of coffee in 1970 cost only twenty-five cents!
Inflation is at a 40-year high, and that no doubt seems scary. First, let me assure you that there is an entity responsible for monitoring inflation and making sure it’s controlled, and that’s the Federal Reserve. The Federal Reserve sees a rate of inflation of 2 percent per year as the right amount of inflation. When the inflation rate rises above that level (December’s inflation rate was about 7%), the Federal Reserve gets to work to bring inflation down. So, they’re on it! But nevertheless, here we are. My gallon of milk at HEB cost me $3.28 today, whereas this time last year it was just a few cents over $3. Those pennies quickly add up.
What can you do to live with inflation? The first thing to do is to get your budget out of your head and on paper (or in a spreadsheet, or in an app) and get a solid picture of what money you have coming in and what money you have going out. Awareness about your spending may help you identify opportunities to save.
Take a look at where you can make adjustments so more of your money is available to go toward expenses that are increasing. Look at where you can decrease your expenses. Here are some places to look:
“Cutting the cable” was a buzz phrase a few years ago. Cable bills were high, and streaming services like Netflix and Hulu were so much more affordable. But now, how many of us have not one, not two, but multiple streaming service subscriptions? Consider cutting back to just one, and using free entertainment like Kanopy (thanks, ACC Libraries!) or old-school DVDs from the public library to supplement your one streaming subscription.
Reducing cell phone bill
One of the widest range of expenses I see when helping students with budgets is cell phones! It’s not uncommon for students to have cell phone bills topping $100 per month. If this is you, here’s a great place to reduce that expense. Consider switching to a prepaid service plan available through reliable providers such as T-Mobile and Verizon. You can get an amazing plan for $40 or less without sacrificing call, text, and data limits.
Reducing grocery bill
Meat has gone up too over the past year. My rule of thumb is harder to stick to these days: Pay no more than $2.99 per pound for meat. Since meat has gone up, consider switching to more plant-based meals. Veggie prices have remained consistent! Purchase fewer packaged or pre-made food items by finding a few go-to easy recipes. Good and Cheap is a great cookbook to look for some new affordable recipes. Explore using local food pantries, and check to see if you qualify for SNAP (Supplemental Nutrition Assistance Program).
Other things you may consider if they work for your situation are taking fewer car trips by using Cap Metro with ACC’s Green Pass. This pass lets you ride Capital Metro for free as an ACC student or employee. Take advantage! You also can reduce eating out or purchasing sodas and snacks and re-evaluate any other monthly subscription fees you have. Take time to “unsubscribe” from promotional emails that are encouraging you to shop a 60% sale or providing you a tempting coupon that expires at midnight. Remove those temptations from your inbox!
Inflation, as it is right now, can be scary, but remember, it’s a normal part of our economic system, and it’s always running in the background. You can’t control the rise and fall of inflation, but you can control your own financial decisions and make choices and adjustments that will help you manage inflation today and in the future.
What does this next year hold? Economists expect prices to continue to climb for us over the next year or two. The strategies the Federal Reserve implements to control inflation take time to have an effect. I hope by 2024 our inflation rate is back in check at around 2%, which is healthy for our economy.
ACC’s Student Money Management Office offers 1-on-1 support and tools for students to learn more about personal finance.
Resources from ACC’s Student Money Management Office:
American Rescue Plan (cash for ACC students)
For more information, visit austincc.edu/money.