What’s your personal inflation rate?
The overall inflation rate currently sits at 3.7%, but that may not be the figure you’re actually seeing in your household. Your personal or family inflation rate depends largely on where you live and how you spend your money. Understanding that rate can be the key to making smart decisions and making your money last.
Every month, the Bureau of Labor Statistics (BLS) tracks the price of 80,000 household expenses and uses that info to calculate the Consumer Price Index (CPI). Everything from house payments to cupcakes gets included.
These items get divided into 8 categories:
- Food and Beverage
- Housing
- Transportation
- Apparel
- Medical care
- Recreation
- Education & Communication
- Other goods & services
Each of these categories are ranked by relative importance to most households. Your personal inflation rate will depend on your levels on spending in each category. For example, if you are a renter and are driving a lot, your inflation rate will likely be higher than someone who has a fixed-rate mortgage and is able to work from home.
Where you live will also play a part, especially when it comes to housing costs. The average mortgage or rent payment takes up about 28% of household monthly income. If you live someplace where housing is cheaper, that percentage will go down.
If your inflation rate is high, there are some things you can do to lower it. Start by focusing on your biggest expenses: energy, housing, fuel and food.
Look for ways to use less energy around your home. Lowering your thermostat a few degrees and turning the heat down when you’re away can help you save.
You can lower your monthly fuel costs by exploring grocery store loyalty programs and consolidating your errands to avoid multiple trips. Gas prices vary widely, so try using an app to search out the lowest prices in your area.
To save on food, buy in-season and locally where you can, and try meal planning based on weekly specials. Buying some items in bulk can also offer some savings. Sticking to your list is a sure-fire way to keep your bill down as well.
Knowing how inflation affects your bottom line helps you identify moves that keep more of your money in the bank.
