How To Adjust Your Budget for Inflation

How High Is Inflation and What's Causing It?

According to a recent Bureau of Labor Statistics report, the inflation rate is 2.8%. That might not sound very high, but cumulatively, prices are 23% higher than in February 2020, according to Bankrate.com.

During this prolonged period of higher prices for housing, food, healthcare, utilities and gasoline, you might wonder how to afford the basics of daily life. "The bottom line is that you either need to make more or spend less," said BECU lead financial educator Stacey Black.

"Most people have more control over how they spend money than over their income," Black said. "So focus on your expenses first — and look at every single item."

1. Reduce Energy Use at Home

Although nowhere near the high costs of 2021-2022, you may have noticed your home energy utilities cost a bit more lately. The electricity index increased 2.5% and the natural gas index increased 6% in February 2024.

Reducing energy use at home can save money on your bills and decrease your carbon footprint. Here are a few ideas to consider:

• Use programmable thermostats if you can and set the temperature higher when it's warm and lower when it's cold.
• Seal cracks around windows and doors, and seal holes and gaps in ductwork.
• Install energy efficient lighting.
• Wrap your water heater in a fiberglass insulating blanket and lower the heater's temperature.
• Read more home-cost saving tips from Puget Sound Energy, Seattle City Light and the U.S. Department of Energy.

2. Stretch Your Food Budget

The inflation rate for food may be modest at 1.9% in February 2025, especially compared with 13.5% jump in August 2022. But what you buy can have a big influence on your grocery bill. The category that includes meat, poultry, fish and eggs was up 7.7%, and the cost of eggs at the grocery store hit an all-time high in February, according to CNBC.

There are some simple steps to take to save on your grocery bill. Black offered tips she picked up through her own efforts to develop healthier eating habits:

• Check your cabinets and refrigerator before shopping so you don't make any repeat purchases.

• Plan your menu for the week ahead so you don't waste any food.
• Stick to your grocery list.
• Shop around at different stores for sales.
• Don't shop for groceries when you're hungry.
• Buy groceries online and pick them up curbside to avoid impulse buys.

3. Save on Gas

The inflation rate for gasoline decreased 3.1% in February. In Washington state, gasoline prices decreased between April 2024 and April 2025. However, gas prices are likely about to increase in time for summer, as they do every year.

Reducing the miles you drive and increasing fuel efficiency can help you save money. Bonus: Reducing fuel use is also good for the environment.

Here are a few tips Black has collected over her years helping people with budgeting and saving money on transportation:

• Plan your errands to take care of several tasks in one trip.
• Carpool with people who regularly go the same places you go.
• Take public transportation where and whenever possible.
• Shop for lower prices using an app like GasBuddy. (Limit the distance of your search or you'll cancel the benefits by driving farther.)

4. Slow Down Debt Repayment

If you're actively paying off debt, but you're worried about making ends meet, you might have to scale back on making extra payments for now, Black said.

That means your target payoff date might be a little farther out than you'd like, but you'll have peace of mind knowing you have money to cover basics like groceries.

"Depending on your situation, it might be worth paying just the minimum for a while to ensure you don't end up in even more debt," Black said.
A minimum-only payment still helps you pay down your debt. Just remember to keep your budget for debt payment steady and pay on time.

5. Reduce Interest Rates on Debt

Lowering your interest rates on your credit card debt could help your payments knock down your total amount owed. Explore credit card balance transfer options with low or no interest. 

But Black says to use caution: Your credit should be good enough to qualify for the balance transfer offer. If you apply and don't get the new card, you might end up temporarily dinging your credit due to the credit inquiry.

Ensure you can pay back the debt in time to make the offer period worth any balance transfer fees, if charged. If the rate jumps after 12 months, for example, do you have enough time to pay down the debt?

A debt consolidation loan is another option to reduce your overall interest, but that option requires caution, too.

"Make sure you can commit to paying off the new loan without adding more debt to the credit cards you free up," Black said.

Use a debt consolidation calculator to be certain it's a money-saving move in the long run.

6. Shop Around for Insurance

Insurance is a service that's easy to forget about until you need it — or your policy renewal arrives. But Black said it's a good idea to revisit your house, car and any other policy at least once a year, and perhaps more often during periods of inflation.

For example, auto insurance rates have increased far faster than the cost of living since 2021, according to the Insurance Information Institute. Between 2021 and 2024, insurance increased 47%. A policy that cost $1,000 in 2021 might cost $1,470 this year. 

Review your policy to make sure you only have the coverage you need, or see if you can lower the premium with a higher deductible — just ensure you can pay that amount in an emergency. Ask your insurer if you might qualify for any new discounts. For example, perhaps you're driving less or your child left for college. 

In addition, challenge a few insurance companies to win your business with new quotes.

7. Cancel or Reduce Subscriptions

As you evaluate your expenses, Black advised paying special attention to all your subscriptions, including magazines, newspapers, apps and streaming services. 

Pay particular attention to your streaming services, because prices shot up in the last few years.

Talk with members of your household to confirm how important some subscriptions are. They might no longer use the streaming service they were excited about last year.

If you have cable, think about whether you need all the channels in a deluxe package, or if a lower-priced option might work.

8. Re-evaluate Your Cell Phone Service

Cellphone service should also get re-evaluated periodically.

"Your cellphone carrier isn't going to call you and say you're not using all the minutes you're paying for," Black said. "It's up to you to make sure you're paying for what you use and make a change if you're not."

9. Scale Back Vacation Plans

If you've been saving for a big trip, consider something smaller. Then, apply some of your vacation savings to essentials for a while. Instead of that costly plane ticket, consider a staycation and other budget-friendly vacation options.

Or double down on savings.

"If that vacation is really important to you, it might be motivating to look closely at your spending and cut out more of what you don't need," Black said.
But she cautioned against cutting back too much and not giving yourself any flexibility. "If you're too strict, you might splurge and put yourself in debt."

The same goes for other big-ticket goal purchases that you might need to delay due to higher prices — like increased costs for new cars. Black said it's important to keep those goals in mind. They just should be a lower priority for a while.

And you can still take steps to include fun in your budget.