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how does inflation affect spending by Freedom In A Budget
Money Motivation Saving Money

How Does Inflation Affect Spending

Are you feeling the impact of inflation affecting your spending and your budget


What expenses are affected by inflation?


The annual inflation rate is over 8% for 2022. 


An 8% inflation rate may not feel too high, that’s less than you tip your waiter going out to eat, but it adds up quickly. 


I spoke to some of the top personal finance experts on YouTube and here is how inflation has affected their budget. 

>> Also read How Inflation Has Changed Our Budget

Has inflation caused families to sacrifice?

As a family of 6 with very specific dietary requirements, inflation has been brutal on our grocery budget. I feel fortunate that we are able to cover the changes in our weekly food budget, but it has meant saying no to other events, changing vacation plans, and limiting our dining out.” – Lydia Senn

Because of inflation, families like Lydia’s have to decide what is a priority for them, quality groceries. Since the cost of groceries has increased, they have to give up things they really enjoy. 

How does inflation affect grocery prices?

Our grocery budget has been deeply impacted by inflation. We went from spending $100-$150 a week (averaging $450 a month) for groceries for our family of five plus two dogs (we include dog food in our grocery budget) to now spending more than double. We are spending between $275 and $350 a week now! Averaging out nearly a thousand a month! Grateful we are 100% debt free because there’s no way we could have afforded this increase on one income if we were still burdened by debt.” – Jessi Fearon, Author of Getting Good with Money

This is why it is so important to get your money in order. Imagine having an increase of over $500 a month in just one category of your budget and having to still make debt payments?

Typically, my household has a strict grocery budget (food, drinks, and toiletries) of $350 per month and we complete one primary shopping trip per month. We have since had to increase our food budget to make it through the month.

With inflation costs we are seeing two major shifts in grocery spending:

  • The cost of items is increasing forcing us to cut non-essentials.
  • Items whose cost remained unchanged are shrinking in size, quantity, and the amount and not lasting the month like they used to result in more frequent trips and additional spending. ” – Samantha Hawrylack from HowToFire
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Inflation has affected my budget by increasing the price of food. My wife and I had gotten lazy with keeping tabs on our grocery budget, and it was getting out of control!
Our response was to focus on frugality again. Where we live in the Western US, WinCo is the cheapest grocery store. We got disciplined with only shopping there for our main grocery trips. Plus we agreed to only visit Costco once a month.” – Garit Boothe at DigitalHoney.money

How does inflation affect the housing market?

Our rent increased from $2,300/mo to $3,050/mo.  The hot housing market caused our landlord to sell his primary residence and move into the house he was renting to us.   Not only did our monthly budget go up by $750, we had to absorb $3,000 in unplanned moving costs and downsize by 300sqft.  

I really don’t understand how most people absorb this.” – Robert at Stop Ironing Shirts

This is really frustrating to hear, not only did Robert’s monthly budget increase, but he had to pay a crazy amount in moving fees and had to downsize his living space. 

How does inflation affect electricity costs?

Our electric bill for our home has gone up 16.6% since August 2021. 

Last year the cost per kWh was $0.12 and this year it is $0.14. 

That doesn’t sound like much but at this rate we spent $32 more this month than we would’ve for the same amount of power used last year. 

How does inflation affect gas prices?

As someone who loves the outdoors and cottage season, my summers are usually filled with road trips up North or even to different parts of the U.S. and Canada. But with gas prices being at all-time highs this year, I’ve found myself and my friend group opting for local events or staycations way more frequently.
At its peak, refuelling my car was about 40% more expensive than usual. And I drive a pretty fuel-efficient Ford Focus, so it’s not even much of a gas guzzler. All of a sudden, a regular $50 fill-up started costing $80 to $90. For some of my friends and family who drive pickup trucks, the idea of a multi-day road trip across the country or even a long drive up North slowly became out of the question.
Thankfully, we’ve shifted our focus to exploring more of what’s local; like parks, beaches, and town/city events that go on. It causes us to spend way less in gas, and we also get to explore more of our own backyard which has been surprisingly fun!” – Tom Blake at www.thisonlineworld.com

We’ve all felt the effects of the price of gas almost doubling in the past couple of years. 

Some have just ate the increase in their budget. 

Some (like myself) found apps like Upside that allow you to earn cash-back on your gas

Can you turn the negative affects of inflation into something positive?

I drive a large SUV and the increased price of gas was killing our budget. Because of that, I decided to spend more time at home. I chose to invest the extra time at home into my business. I read books, listened to podcasts, and took a few courses. When I applied the knowledge I gained to my business, I was able to see an increase in income!” – Maureen from The Magical Mundane Life

Take your big dreams and turn them into a profitable online business.

Do you dream of owning your own business but don’t have the confidence to start? Are you filled with ideas and passion but not sure which direction to take to turn those dreams into reality? Does the technical aspect of building an online business feel overwhelming?

If you’ve ever wanted more for yourself than a job you hate then Dreamer To Profitable is for you.

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Is anyone not affected by inflation?

“Inflation hasn’t really affected our budget much. Since the “big” categories are already so low since we househack and drive paid-off cars, our overall base expenses have only increased slightly from things like groceries and gas. Getting those big categories right has really helped us not worry about the little stuff!” – Cody Berman

If you are not on a written budget… get on a written budget!

Remember, budgets are NOT constricting but instead give you FREEDOM to be in control of your money, rather than your money in CONTROL OF YOU!

Whether you are an excel nerd (like myself) or prefer pen and paper, I’ve got you covered.

Ways to save!

  • CIT Bank: BEST High-yield savings account; your bank shouldn’t be charging you money. Instead, YOU should be making money off your money!
  • Ladder: Get a quick, free quote on term life insurance, affordable, online term life insurance. No exam! No waiting! No hassles!
  • GetUpside: Earn 20 cents per gallon on gas cash back when you download the app and use code FIAB20.
  • Fetch Rewards is a free grocery savings app that rewards you just for snapping pictures of your receipts. That’s it. Really. Free gift cards on groceries on thousands of products every day, no matter where you get your groceries. Just scan your receipts and get gift cards from retailers like Amazon, Target, Ulta, Applebees. Use code QHKBH to earn 2,000 points ($2)!
  • GoodRx: Free app that provides you savings of up to 80% on your prescriptions (even if you don’t have insurance). $5 sign up bonus!
  • Rakuten: Get cash back on online purchases and automatic coupons and savings with their browser plugin… and remember, you have to make a $20 purchase to get your $20 for free!
  • Blooom: FREE 401(k) or IRA analyzer, Let the experts take a peek at your retirement account. Get real advice on how it’s doing and how it could be performing better.
  • Lively: A modern health savings account. Prepare for tomorrow by making smart decisions about finances and healthcare today. Lively HSAs are free for individuals and families, so you never have to worry about hidden costs.
  • Build Wealth by Investing in Index Funds Course: I’ve teamed up with my friend Jeremy from Personal Finance Club to teach you everything you need to know to invest in index funds! How to open an account, how much to invest, and how to choose an index fund. You’ll gain the knowledge and confidence to optimally invest and build wealth for decades.
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