A Beginner’s Guide to Budgeting in the Midst of Inflation

If you feel like you’re struggling to keep your head above water as prices rise, you’re not alone — and you don’t have to suffer. Budgeting can help you achieve your financial goals and have a comfortable way to spend and save money without guilt even as prices soar. Here’s how to budget in the midst of inflation.

1. Define a Financial Goal

Before you set a budget, you need a financial goal to look forward to. Your budget will help you achieve this goal in the long or short term. Setting a long-term goal is preferable, as it gives you a feeling of purpose when sticking to your budget feels difficult.

Over 53% of Americans resolve to save money with the hope of paying down debt, with 33% of people saving for another financial goal in the new year. Becoming debt-free is a great milestone to work toward, especially if you have student loans. If you don’t have debt, think of something else you want.

Common financial goals you might consider include:

  • Moving out of your parent’s house or buying a house
  • Paying off debt
  • Starting a business
  • Maximizing retirement funds
  • Going back to school
  • Having children

Your financial goal should be the thing that brings you back to your budget and reminds you to trust the process. Think of how much closer to your goal you’ll be in a year.

2. Track Your Spending

Before you make any adjustments to your budget, track your spending for a month. Analyzing your current spending will give you a great idea of where to start cutting back. 

For example, you may notice that you spend too much money on new self-care products. In that case, you can limit yourself to one or two new things per month. You’ll create less waste while also fully enjoying the products before deciding whether they’re right for you — allowing you to save money at the same time.

One of the best ways to track your spending is to use a budget journal. A journal that details all your expenses and savings can help you achieve the financial goals you set while feeling more organized and responsible. With a budget journal, you’ll have everything in one place, meaning you probably won’t forget to pay a bill again.

3. Analyze Your Subscriptions

One way to quickly lose money is to forget all the subscription services you have. Be realistic — how many streaming services are you using right now? You might be able to cut back on how many you subscribe to.

Choose one or two to keep — they should be enough for now, and once you’ve exhausted everything you want to watch, you can cancel that subscription and subscribe to another streaming platform. You’ll still get to watch everything you want to, but you won’t pay a high fee for having all of them at once.

In some circumstances, subscription services can be good for your budget. During inflation, you may make some hard decisions with the things in your grocery cart. Grocery delivery services can save you money by helping you avoid putting unnecessary items in your cart. You may even want to look into a meal kit option, which will ship ingredients to your door every week — no snacks or frivolous spending added!

4. Choose a Budget Plan

Your budget plan must work for you. Several budget plans prioritize savings, while others want to help you pay down debt. You might have to try a few out before you find the budgeting system that works for you. You may even need to create your own budget from the ground up!

50/30/20 Rule

The 50/30/20 rule breaks up your income into different categories, and you can distribute those categories as you see fit. It’s an easy way to handle your money, especially if you only get paid once a month. 

This budget splits your income in three ways:

  • 50% of your income goes to your mandatory expenses — rent, health care, groceries, and so on.
  • 30% of your income goes to what you want — entertainment, experiences, restaurants, and more.
  • 20% of your income goes to savings and debt repayment.

Since the 50/30/20 plan is such a manageable budget to follow, it might be the best for beginners. It has loose restrictions on what expenses fall into which categories, leaving you more adjust the budget as you see fit.

Zero-Based Budget

This budget gives every single cent a job, so nothing is left over by your next paycheck. Having no flexible money to spend on whatever you want might be a little disappointing, but it’s one of the best budget forms to help you get out of debt. Put any leftover money into your debt repayment or savings account. While it feels very restrictive, this plan can help you accomplish your financial goals.

Cash Binders

If you save better with physical money instead of a bank account, this option is ideal for you. You may be inclined to spend less when you see the money leave your hand. 

Stuff cash into certain envelopes for expenses, sinking funds and more. You might even put your savings in an envelope for a few months — but don’t forget to put it back into a bank account so it can earn interest!

Spend Your Money Wisely and Save for Your Future

Budgeting now could lead to a more comfortable future, even if it might be difficult to see amid inflation. Remember to treat yourself now and then, as you’ll eventually experience symptoms of burnout if you don’t do something for yourself now and then. Keep looking forward to the future and take each day at a time. Remember, a setback is not the end of your journey. Adjust your budget and keep moving forward. 



3 Things To Do When Your Friends Make More Or Less Money Than You

How to Manage Financial Stress and Recover from Burnout

Reflecting on Money Anxiety as a Child of the Great Recession

Cora Gold

Author Bio: Cora Gold is a freelance writer and the Editor-in-Chief of the women’s lifestyle magazine, Revivalist. Connect with Cora on LinkedIn and Twitter.