If you’ve been to the gas station, grocery store, or practically anywhere else lately, you know about rising costs. That’s left everyone – including service members, veterans, and their families – feeling the financial pinch.
The annual inflation rate for the United States is 8.6%, the largest annual increase since December 1981 and after rising 8.3% previously, according to U.S. Labor Department data published June 10.
Robert Frick, a corporate economist with Navy Federal Credit Union, defined inflation as an increase in prices caused by too much demand for the supplies available.
“But there’s nothing simple about the underlying causes of inflation today,” he said. “Historically, there have been simple causes of inflation that spread through the economy, such as the oil shocks of the 1970s, or generally when consumer spending increases as an economy heats up and supplies can’t keep up. Today’s inflation, however, started with the global economic crash caused by the COVID-19 pandemic, and when economies started to reboot, demand overwhelmed supplies.”
Frick said at first, this was mainly due to the fact that not enough goods were being manufactured, as well as the slow transportation of goods.
“Goods inflation is now moderating, but we have many other sources of inflation,” he said.
Frick explained that the services economy is ramping up as COVID levels have dropped, which is pushing an increased demand for services, as well as elevated prices for services.
“Compounding the matter, services businesses can’t get enough workers, so they are raising wages and those costs are being passed along to customers,” he said.
Russia's invasion of Ukraine has also cut supplies of oil, grains, and certain other commodities, pushing up the prices of gasoline and food. And shelter costs — both rents and mortgage payments — are also rising for a variety of reasons, Frick said.
Retired Marine Col. and Regional Outreach Manager for Navy Federal Credit Union said there are several proactive steps members of the military community can take to “inflation-proof” their monthly budgets so savings goals stay on track.
“You should check in on your budget regularly to see if or where you need to make changes,” he said. "Notice where your weekly or monthly spending is higher, and where other expenses may be lower.”
After you’ve done that, Stackhouse said to adjust your budget to fit your spending patterns and make up the spending difference in your budget to avoid going into debt.
“It’s also important to remain conscious about your spending, even on the little things,” he said. “Get into the habit of being aware of what's in your wallet and your bank accounts. Check the balance of your credit cards every day and see if there are any expenses you can cut or deprioritize for the time being.”
Stackhouse also recommends tracking your daily or weekly purchases to see if these have increased over time, to get a better sense of your financial shifts.
“You could try a new budgeting technique to see if that helps you prioritize savings and other financial goals,” he said. “There are a host of budgeting methods to choose from, so now may be a good time to switch it up.”
Stackhouse said to consider moving around some current savings or investments in order to stay on top of your financial goals – in moderation.
“If you created an emergency savings fund before the pandemic, use some of that money towards your higher-cost expenses,” he said. “You should never stop investing in your retirement, but if inflation is making it impossible to invest at the same level, adjusting your percent deposited might make sense for a few months. Just don’t forget to adjust it back."
Stackhouse said you should also take advantage of saving on goods where you can find them, by buying what’s on sale at the store, using coupons, discount codes, and credit card rewards and benefits.
“Use your nearest military exchange, if you live near a base,” he continued. “Servicemembers have access to the military exchange and the tax-free, name-brand items there provide an easy way to shop smarter during periods of high inflation."
If you tend to shop online, you can access the exchange digitally. You’ll need to register on your military branch’s exchange website with your Social Security Number and date of birth to prove you’re a service member.
Reach Julia LeDoux at Julia@connectingvets.com.