Budgeting Reality Check: Your Money vs. Inflation

Want a better budget? Might have to look at the past!

Hey Hey -

Ever feel like your grocery bill keeps mysteriously growing? You're not alone! Inflation is impacting everyone, but it's also personal. The reason why I want to flip this into your thinking in regards to a budget is because the main CPI/ Consumer Price Index that tracks the collective doesn’t show you how inflation is moving the needle in your wallet. Your [personal] CPI allows you to see how you’ve been spending in the past to fully align your budget to add up to the true value of your life costs, not just vibes.

If you’ve been following me for a while, you know I love talking about not only the CPI but how it ripples down to consumers like you and me. If utilities went up for the collective say 2.3%, how does that look in how much your electricity, water and gas went up (or down) the month before? The CPI looks at the spending of the month before, kind of like checking the budget.

Here’s why we’re talking about this -

• The CPI tracks how much the basket of goods YOU buy changes in price over time.

• National averages are great, but your spending habits are unique!

• By reviewing your bank/credit card statements from the past 3 months, you can see:

  • Where your money goes

  • How much more you're spending on essentials like groceries

With doing a Personal Consumer Price Index (CPI) track right before you do your budget for the month comes in. It's like a custom inflation tracker for your spending habits/cycle.

Here's how it works (it's easier than you think!):

• Gather 3 months of bank/credit card statements. Along with your budgets for those months

• Categorize your spending (groceries, gas, etc.).

• Track price changes for your most frequent purchases (coffee, milk, etc.).

• Calculate the percentage change in price for each category.

• Look at your previous month’s budget to see if you were on par or paces away from what you budgeted.

• Determine if you need to change your budgeting formula or if you’re spot on.

Why do this?

• Budgeting with reality: Your personal CPI helps you set a budget based on actual spending, not guesswork.

• Inflation insights: See how inflation is impacting your wallet, so you can adjust your budget accordingly.

By creating your personal CPI, you'll gain control and make smarter financial decisions. No more budgeting vibes, just budgeting with knowledge! You might can’t do this every month, but look at how you did by the previous quarter to know how to align better. Also, no two months are alike. Learn about types of budgets here or the apps I would recommend.

How does it add up? Let me know in the comments below!

P.S. Don't forget to share this newsletter with anyone who struggles to keep up with inflation or budgeting!

Budgeting has been a major thing for people as of late with inflation and rising costs! Even much so I started to offer a budget analysis within my services! Check it out on my website!

Talk Soon -

Nadia