In the next few days, I believe that we’re going to have to raise our budgeted expenses. It’s been a year since we’ve been married, and we’re just now starting to experience the concept of inflation. We can’t buy groceries for what we did a year ago!
Inflation in 2009 was mostly deflation, meaning that the cost of goods went down. However, in 2010 the deflation turned back into inflation of approximately 2.5%. When we started budgeting as a couple, we weren’t used to inflation! Now, we must deal with inflation. Our income dramatically increased in the past year, so the raising of our expenditures won’t be much of a struggle.
I think a good rule of thumb is to consider your current financial situation. Are you in debt? Are you saving up for your fully funded emergency fund? Where are you at in your financial process? These factors come into play when you are considering on raising your expenditures.
I tend to lean on the side of not raising our expenses on a regular basis. I know that I must consider the effects of inflation on our finances, however. Adjusting your budget month-to-month should usually keep your expenses at the same level. But occasionally, it is wise to consider an increase in your spending.
How have your expenditures increased in the past year?
! John wrote two articles for the book: "Budgeting for Groceries" and "How Grocery Stores Work."
