6 expenses on the rise in 2022 and how you can save money

Woman refueling her car at a gas station.

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Inflation comes and goes. Knowing how to save money lasts forever.


Key points

  • Due to the pandemic, inflation has reached 7.5%.
  • Cutting costs can help you offset the impact inflation has on your budget.

As horrible as inflation may seem, it is a normal part of the business cycle. Economists say the current rate of inflation can be attributed to a surge in consumer demand and a lack of supply due to the global pandemic.

To put our current situation in perspective, the inflation rate is around 7.5%. The year after World War I ended, the rate of inflation averaged 18%, and two years after World War II, it was almost 11%. Due to various global problems, the period between the late 1960s and early 1980s is called “The Great Inflation”.

Simply put, when Americans have money to buy things, but the “stuff” we want is not available or in short supply, prices go up. At some point, whether it is an increase in production or a decrease in demand, prices will go down again.

Granted, understanding how it works isn’t helpful when you’re stretching your monthly budget to pay more for everyday items. Here, we’ve compiled a list of things you can expect to cost more in 2022, and offer ways to save money.

1. Shelter

It’s no secret that home prices have hit new highs, forcing some out of the real estate market. Typically, as mortgage rates rise, one would expect home prices to fall, but that’s not the case this year. And that is mainly due to the lack of inventory.

What you can do: You have several options, including buying a “fixer” – a house that fewer people are interested in. A rehab loan, like a 203(k), provides enough to pay for the house and improvements. Or, you can wait until more houses are built, inventory grows, and prices start to look like something closer to “normal.” The best part about waiting is that you’ll have more time to save for a down payment.

2. food

You can expect to buy a house, but not food. Staple foods such as eggs and milk are becoming more expensive. Junk food like Coca-Cola, Pepsi, Ritz and candy will also cost more this year.

What you can do: Limit junk food until prices stabilize. Instead of buying prepackaged foods, buy the raw ingredients to make your favorites. There are so many free, easy recipes online that it’s hard to go wrong, even if you’re not a top cook.

If you’ve never been a coupon clipper, now might be a good time to start. If nothing else, the clipping coupons remind you to look at the weekly circulars and sales. Build your shopping list around what’s on sale.

3. Gasoline

One of the current debates in Washington centers on whether companies are raising prices, using the pandemic as an excuse to fill their coffers (spoiler alert: some are).

According to the US Energy Information Administration, the average price of gasoline increased by $1 between the beginning and end of 2021. Now that Americans are driving more, the issue of supply and demand that we mentioned earlier comes into play.

What you can do: You may not be able to control the cost of gas, but you can reduce the amount of time you drive. For example, while carpooling has never been particularly popular in the US, now may be the time to find someone to carpool with. If public transportation is available where you live, consider joining the masses for a while. And if you drive, apps like GasBuddy and Gas Guru can help you find the cheapest gas in your area.

4. Clothes

For a while, we all lived in our pajama bottoms and sweatpants (and it was glorious). Now that we are expected to dress like adults again, the demand for clothing has increased. Unfortunately, so are the prices.

What you can do: Before you buy something new, sell your old stuff through a consignment store (brick and mortar or online). And instead of buying 15 new clothes, choose five or six well-made clothes that coordinate with each other so you can mix and match them. If you stay away from trendy styles and stick to the classics, you’ll likely keep those pieces for years.

5. Vehicles

It’s no surprise that the cost of buying a new vehicle is at an all-time high. COVID-19 did a real number on the supply chain, leading to component shortages. Unfortunately, the cost of used cars has also increased, jumping 40.5% between January 2021 and January 2022.

What you can do: If you have a car and can make it last a little longer, you can make money by investing in what you’re already driving, at least until new car prices become more competitive.

6. Heating costs

According to the US Energy Information Administration, American households could see their heating bill increase by as much as 54% this winter.

What you can do: Change the way you keep your house warm. Here are some ideas to get started:

  • Take advantage of the sun’s heat by opening curtains or blinds on sunny days.
  • Close unused rooms. It is useless to heat a space in which you will not spend time.
  • Lower the temperature a little more than you are used to lowering it. Don’t get so cold that you’re uncomfortable (or unsafe), but look for a temperature you can handle while conserving energy. If you work away from home, make sure your thermostat is set to 63 or lower when you’re away.
  • If you like to bake, bake it. The heat from the oven will keep your kitchen warm for hours.
  • Get an energy audit to find out which areas of your home are losing the most heat. Check with your local gas company to see if they do free or low-cost audits. If not, find out if they recommend someone for the job. According to HomeAdvisor, the average energy audit is around $400. If the auditor finds ways to help you save on energy costs, it could be money well spent.

Despite the doom and gloom stories, the rate of inflation will come down. He did it after the two world wars, and he will do it after this global pandemic. In the meantime, now is a great time to practice smart ways to keep more money in your bank account.

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