If you're living on a fixed income, here's how to navigate inflation and high prices
Michael Gray, 69, has been living on a fixed income from Social Security for the past three years.
He used to have a strict diet of fruits for breakfast and vegetables that he could buy at his local grocery store, and he would pay out-of-pocket for his prescription medications, since his insurance doesn't cover them.
But now that inflation has caused so many prices to rise, Gray is going to food pantries for his produce, which he said is all on the brink of rotting, and he now has to pick which prescriptions to refill each month so he doesn't over spend.
Gray also got rid of his car because his insurance, licensing and gas prices were too high. He opted for a mobility scooter instead.
"One fear I have is that I go into debt," Gray said. "Every little bit that I have to pay out of my pocket takes away what I can pay on groceries or over-the-counter medicine."
Inflation and recession have become part of almost every conversation Americans are having right now about money and saving for the future. For people on a fixed income, that means spending is tighter than ever.
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Trey Loughran is CEO of Purchasing Power, a benefits program that brings financial flexibility to employees. He said people living on a fixed income are living paycheck to paycheck from sources like pensions, Social Security or disability, which already puts them on a tight budget. Hesaid inflation is going to really hurt people on a fixed income or who have lower incomes.
"It's going to hurt (consumer) disposable income, because they're going to be much more disproportionately impacted by inflation," he said.
Yung-Yu Ma is a chief investment strategist for BMO Wealth Management-U.S. who analyzes macroeconomic and market trends. Ma said people already have started looking at ways they can limit spending and find more affordable options for saving.
"It's an opportunity for consumers to realize simple savings are out there but also see how strong their preferences are for certain products over others they may have been accustomed to buying out of habit," Ma said.
Buy generic and store brand products
Groceries are the most expensive line items in a budget. Buying generic, in-store brands is one way to cut down on that cost.
Forrest McCall is founder of Don't Work Another Day. He said people should try buying generic or store brand products like Great Value, Kirkland or Up & Up instead of brand names to save.
"Generic alternatives often cost 15% to 25% less than brand name products while offering similar qualities and taste," he said.
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Many people also sign up for warehouse memberships to companies like Costco or Sam's Club to buy in bulk and have access to sometimes cheaper gas prices. However, McCall said people should be of these memberships because on some things you may not be saving at all.
"Sometimes the items at warehouse stores can actually be more expensive than your local grocer in addition to having to purchase in bulk," she said. "Additionally, these stores don't offer the ability to use coupons or discounts, something that a traditional grocery store does offer."
Don't fall into credit traps
Americans are putting more on their credit cards as high prices affect the way they budget and spend.
Loughran said people on a fixed income find that getting credit is challenging even in a noninflationary environment, and it becomes more expensive amid high inflation.
He said some borrowers then tend to spend more for credit or go to alternative sources of credit and get caught in a downward credit spiral of borrowing more than they can afford.
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Loughran also noted that people will use different avenues of credit like "buy now, pay later" systems.
"People feel it's easy to use buy now, pay later, but they might wake up and realize that they've used it with several different providers across several different retailers," he said. "Even though it's not balance on a credit card, it can accumulate over time, and you just want to be smart about how much you're using it."
McCall said trying to drive less will help combat fuel prices. She said visiting more locations in a single trip or reducing the number of trips altogether can reduce the amount of driving and number of times needed to stop at the gas station.
McCall also suggested carpooling as another alternative to reducing driving.
AARP published a list of 99 ways to save money, such as shopping at different grocery stores or planting a garden with high-cost fruits and vegetables. One tip was to consider purchasing an electric vehicle to save on high gas prices.
And because used cars are so high in demand right now, AARP suggested that people can sell their vehicles privately rather than taking them to a dealership.
"Cash is more important than ever," Loughran said. "Think about where you're focused on your spending, and conserve cash for the necessities like food and shelter."
Sara Edwards is a consumer news intern at USA TODAY. You can follow her on Twitter @sedwards380.