Advice
When prices go up and paychecks stay the same, every dollar starts to feel like it’s shrinking. That’s inflation at work—and lately, it’s been hitting hard. Rent costs more. Groceries eat up more of your budget. Even your morning coffee crept up in price. So how do you keep your budget in check when it feels like everything gets more expensive every day?
Today we’ll talk about how you can prioritize your expenses and stay strong when high inflation hits.
It’s not about cutting every fun thing out of your life. It’s about knowing where your money has to go first.
Let’s talk through how to do that, step by step.
Start With the Essentials
Before anything else, cover what you need to survive. Think of it like building a house—you need strong walls to protect what matters most. Financial expert Dave Ramsey calls these the “Four Walls”:
- Housing – Rent or mortgage payments come first. Missing these could put you at risk of losing your home.
- Utilities – Keep the lights on and the water running.
- Food – No one should have to skip meals to pay a bill.
- Transportation – Whether it’s gas, public transit, or car payments, you need a way to get to work and school.
If inflation has pushed your budget to the edge, these are the expenses to lock in first.
Track Every Dollar
You can’t fix what you don’t see. Start tracking your spending—every dollar, every receipt. It’s not about judgment. It’s about clarity.
Use a budgeting app, spreadsheet, or even just a notebook. Once you know where your money’s going, you’ll spot patterns. Maybe it’s takeout three nights a week. Maybe it’s a subscription you forgot about. Either way, those patterns show you what to cut or scale back.
And while we’re talking tools—1st Source Bank offers a Money Management tool through online banking. It helps you track your spending, set savings goals, and stay organized without having to switch between apps.
Cut the Non-Essentials (Gently)
Now, we’re not saying you have to cancel every streaming service and eat beans for dinner all week. But it’s time to make some trade-offs.
Here’s where to look:
- Subscriptions – Are you really watching all five streaming services?
- Dining out – Can you cook at home a few more nights a week?
- Impulse buys – That daily coffee or quick online purchase adds up fast.
It’s okay to keep one or two things that bring you joy—just make sure they fit into your new plan.
Adjust Your Budget for Inflation
The 50/30/20 rule is a popular way to manage your money: spend 50% of your income on needs, 30% on wants, and 20% on savings or debt payments. But with higher prices, your old budget might not work anymore. That’s normal. It doesn’t mean you’re failing. It just means it’s time to shift things around.
Try using the 50/30/20 rule—but adapt it for inflation:
- 60% Needs – Rent, food, utilities, and transportation.
- 20% Wants – Fun stuff, like hobbies or entertainment.
- 20% Savings – Emergency fund, retirement, or paying off debt.
If inflation has squeezed your budget tight, slide more of that 30% into the “needs” bucket. It’s temporary. You can shift back once prices settle down.
Tackle High-Interest Debt First
Inflation is frustrating. Debt on top of it? That’s even harder. Especially when you’re paying interest rates that seem to climb faster than your paycheck.
Start with your highest-interest debts—usually credit cards. Make the minimum payments on everything, and throw anything extra toward that top one. When it’s paid off, move to the next. It’s called the avalanche method, and it saves you more money in the long run.
Want more details? Read our article on the best ways to pay off credit card debt. And if you’re feeling overwhelmed, please reach out. We’re happy to help!
Build an Emergency Fund (Even a Tiny One)
It’s money set aside just for the unexpected. Car breaks down? You’ve got it covered. A trip to urgent care? No need to panic. Hours cut at work? You’ll have a cushion to help you breathe while you figure things out
The goal isn’t to save thousands right away. In fact, trying to do that too fast can feel overwhelming. Instead, start small—$100, then $250, then aim for $500. Every little bit makes a difference.
You don’t need a windfall to start. Just save a little bit each week. Open a separate savings account and set up automatic transfers. It’s an easy way to build up your fund without having to think about it.
Get Creative with Cost Cutting
You don’t have to live in survival mode forever. Sometimes, small changes make a big impact:
- Use coupons or cashback apps for groceries.
- Switch to LED bulbs or lower your thermostat to cut your energy bill.
- Buy in bulk when you can—and split with a friend if it’s too much for one household.
None of this has to feel like punishment. You’re just being smart with your money.
Add to Your Income (If You Can)
If cutting expenses isn’t enough, think about ways to earn more—without burning out.
- Can you sell unused items online?
- Could you pick up a few hours freelancing, babysitting, or tutoring?
- Is it time to ask for a raise or explore a side hustle?
Even small boosts can help you feel more in control. And more control? That means less stress.
Revisit Your Plan Often
Inflation doesn’t stand still—and neither should your budget. Make it a habit to check in once a month.
Ask yourself:
- What’s working?
- What feels too tight?
- Where did I overspend?
- What can I improve next month?
You don’t need a finance degree to stay on top of things—just a little time and a willingness to keep learning.
And if you’re feeling stuck, don’t be afraid to ask for help. 1st Source Bank offers financial wellness tools, calculators, and even one-on-one financial coaching to help you find your footing.
Final Thoughts
Prioritizing expenses during high inflation isn’t just a budgeting trick—it’s a way to protect your peace of mind. It helps you stay grounded when the world feels a little uncertain.
Focus on the things you need, trim what you don’t, and stay flexible as prices shift. Inflation may be beyond your control, but how you respond? That’s all you.
You’ve got this—and you’re not alone.