The Rachel Cruze Show - What to Do When Inflation Wrecks Your Budget

Episode Date: May 13, 2024

💵 Sign up for EveryDollar today - Create a free Budget! Sometimes, you have to wonder, “When did things get so expensive?” In this episode, find out how to keep inflation from ruining your budget, including tips on: -             Feeding your family for less than $100 in a week -             Which expenses you can easily cut from your budget -             How to manage affording childcare Next Steps ·      🎥 Watch my The Right Way To Do A No Spend Challenge video to try a “No Spend” month! ·      📔 Pick up a copy of my new kids book I'm Glad For What I Have! ·      💵 Start saving on groceries with my favorite budgeting app, EveryDollar! Offers from Today's Sponsors ·      🏥 Learn more about Christian Healthcare Ministries. Listen to more from Ramsey Network 🎙️ The Ramsey Show   🧠 The Dr. John Delony Show 🍸 Smart Money Happy Hour 💡 The Rachel Cruze Show 💸 The Ramsey Show Highlights 💰 George Kamel 💼 The Ken Coleman Show 📈 EntreLeadership Ramsey Solutions Privacy Policy Learn more about your ad choices. Visit megaphone.fm/adchoices

I recently saw an article called 20 items to cut from your budget that you won't even miss. So, I thought we'd read through that list together because I do agree that, you know, you've got to cut some things. But the question is, does it really make a difference? Well, hey, you guys, welcome to this episode of the Rachel Crew Show podcast. I'm so glad that you're here. So in this episode, I'll talk about some expenses that you can easily cut out of your budget. And we're also going to chat about child care and what makes sense for your family.

But first, I want to dig into how to handle the rising cost of groceries. So take a listen. Okay, I have good news and I have bad news. So the bad news is that the cost for basic needs like groceries are at an all-time high, which you probably know. But the good news is that your ability to overcome this problem is also at an all-time high. So if you want to know what I mean by this, then stick around because today I'm sharing my top grocery shopping survival tips for you when food costs go up, which we've all experienced, and then your income just stays the same. Plus, at the end, I'll reveal how I fed my family of five last week for

less than $100. So according to a recent study, Americans are spending more than 11% of their disposable income on food, and that's the highest that it's been since 1991, according to federal data. And if food is more expensive at the grocery store than the cost of restaurants is going up too. Mm-hmm. Chick-fil-A, I see you. I see you. Obviously, this is a bummer, but like I mentioned earlier, we've never had as many tools as we have today to help us when the costs increase. Now, everything from budgeting apps to side hustle ideas, to financial advisors, to a personal finance class, we have so much, you guys. We have access to pretty amazing resources, but again, it can be daunting. So let's just go over four tools that you have and how you can take advantage

them. So the first tool that you have available to you is data. Now, this may sound really simple, but it's always helpful to know where you fall in comparison to other people in your demographic who share your same needs. So currently, the average household cost for groceries is $475 a month. And if that number sounds low to you, keep in mind that includes groceries, not just eating out. But getting your grocery spending in line first will help you determine how much disposable income that you're going to have to be able to spend on restaurants and takeout if you want to. The USDA food plans and cost of food report gives a rough estimate of what you should spend on groceries depending on your demographic and financial goals. So here's their basic rundown. For singles, it's anywhere from $241 to $455. For couples,

$596 to $945, and for a family of four. Ready for this, you guys? $969 to $1,000 to $1,000. $578. So based on those numbers, you're probably wondering what you're currently spending on groceries and where you fall on the spectrum. Which brings me to tool number two, a budget. If you've never created a monthly budget, let me be the first to tell you that this is a habit that I am in. And you guys, my family, we couldn't do without the budget because it helps you stay in control. My favorite budgeting app, it's called it Every Dollar. And it makes it ridiculously easy to plan out all of your spending, and especially when it comes to groceries and other expenses. So here's what I recommend. First, open up your bank app or look at your most recent bank statement and add up how much you've

spent on food during the last three months. And then divide that by three. And you can get this rough estimate of, okay, on average, here's what we're spending per month. Now, you're going to use that average number to create your first budgets. You can have separate categories for food, like one item can be groceries, one can be eating out, or you can just combine it all together food. I separate mine because I like to see the difference, but again, it's up to you. Now, if you're average for the last three months with $757,000, see if you can do $700 in the budget. Because remember, all of that spending you were doing was without a budget and probably without some level of accountability. So this is one that say, okay, if I have a plan, can I stick

to this? The third tool that we have is the Internet. Listen, technology is not all bad, you guys. Because Google and Pinterest can be your friends. when it comes to getting creative for affordable meals. So here are a few of my personal favorite money-saving tips when it comes to grocery shopping. First, look at your pantry and your refrigerator. There are some stuff you guys in there that you can just use for dinner. Even like frozen waffles and be like, hey, we're having breakfast for dinner, right? I mean, you could do some leftovers if you have leftover, you know, peppers and onions and some meat,

throw them together and do some fajitas and put some shredded cheese on top. And it can be a burrito bowl if you want to do it. that way, right? So just get creative with what you have in your kitchen. Next is to change up where you shop. So your grocery store is a really big indicator on how much you are spending. So if you even just switch locations, this is a really big deal. If you go to Aldi or Trader Joe's, there's some inexpensive grocery stores like that that you can get a full meal for your family for less than $20. And again, you might not love the scenery in all of it, which I understand, but it's not about all that, right? When you're trying to cut your grocery budget,

go shop at inexpensive places. Next, buy generic. So get the Kroger brand pasta. Get the Publix cheese. Like, do the things you have to do just to buy generic because that will save you a dollar or two per food item at times. Also, try a recipe from my grocery savings guide. I'll put a link below to get you inspired. That'll help you out to. All right, the fourth tool that you can lean on when it comes to saving money on groceries is hope. I know that sounds cheesy, but sometimes we just need a perspective shift, right? So give yourself a little pep talk, you know, just think I'm with you in the grocery store. I'm going to say, listen, you are an adult. You can do this. You can figure out what to buy, and you can look for sales, you can make a plan, you can do this. We can't control the price of the food.

We can't. But we can control where we go. We can control what we're cooking. We can control different things in this. And again, there's some tough calls in there, but you can do this. It's not going to be forever. But for a season, if you have to pivot and be, you know, on the cheaper side when it comes to food and groceries, you can do it. Just remember pivot. You know, Ross Geller, pivot, pivot. That's you. That may have to be you this season. And that's okay. I want you to see that you have options, you guys. You really, really do. When you feel locked into something, you sometimes can make really bad financial decisions. So look at options on what you're going to buy, on what you're gonna make on where you're gonna shop. And again, the costs are gonna fluctuate. They're gonna go up

and down. That's the reality of life. But hey, sometimes you have unexpected wins, though, you know, like my magical $95 grocery bill, just from last week. I went and we were making, you know, I was doing spaghetti one night. We did chili. I was doing stuff and I added up all the groceries. We got some bananas. We gotta get bread and milk and a couple of things. But it was like a light week on groceries. It was $95. And I was like, what? So sometimes you'll have those weeks and that's a win, which is fantastic. Now, if you really want to take control of your grocery spending, I need you to do two things right now. Go to every dollar.com, create your first budget. Then also try a no-spin challenge for one month. So this is a tough one, but this is going to force you

to eat in because a no-spin challenge is just working on necessities in your life. So cook at home, save cash from going out and see how much money you actually save because it's going to be a lot, okay, you guys? But it is so worth it. are you guys, groceries, we all feel it. The prices, they're still up there, they're still up there, but have a budget, have boundaries, think outside the box, and you can do this. So when it comes to your spending habits, everybody has purchases. They consider a non-negotiable. So whether it's having your favorite coffee creamer in the fridge at all times, or making sure that monthly facial is worked into the budget, sometimes our favorite expenses are more costly

than others. But the reality is, in order to achieve your financial goals, some level of sacrifice is always required. I recently saw an article called 20 items to cut from your budget that you won't even miss. So, I thought we'd read through that list together, and I would share with you my honest reactions. Because I do agree that, you know, you've got to cut some things, but the question is, does it really make a difference? And do I agree that I wouldn't miss these things that are on list. So we'll find out. But I'm also dying to know your thoughts. So let me know what you think in the comments and stick around till the end because I'll share the number one category that I cut from my budget when I need to save money. And if you know me at all, this will actually be a

surprise. All right, let's look at this list of things cut from the budget. First and foremost, gym memberships. And you know what? I said this one time on the internet and people came after me. But listen, this is a place that a lot of people do not use consistently, and you still pay for it every single month, and you're not using it. And so, if you can cut it, where else can you get exercise? And the great thing is, there's some things for free. You can go for a walk. You can do some things around that you actually, like, use your own body as weight, right? Like, you can do, like, do that.

You know, you can figure out ways to work out and build muscle for free. Now, you don't want to do that forever, ever, amen, I understand. but if a gym membership is something that's not being used, get it out of here. All right, next up, warehouse club membership. So you got Costco, Sam, all of that. This is a hard one because I do love Costco, but it is one of these things. If you don't use it, you're paying a monthly fee for something that you may not need or that you're using. And some people find that these warehouses, they actually end up sending more and buying things that go to waste,

and it ends up costing them more money than what it's really worth. So look at it for yourself. Next, bottle water. This is a hard one for me. I don't know. It's not great for the environment and all the things, but we do. We buy bottled water because we're on the go. We'll grab and go.

I mean, I try to have my kids, you know, to have, like, their water bottles that they use that are reusable because it is. It's nice, but you can't get really cheap bottle of water. Sometimes it's just convenient. All right. Next, rental car insurance. Oh, I agree with this. Get it out of here. Say no, because majority of places you're able to have insurance anywhere.

So, yeah, I always say no to the insurance when it comes to rental cards. Gift wrap. Okay, so this is an interesting one. Yeah, if you have to pay extra to have the gift wrapped, I think you can do that yourself. I agree with that. Magazine subscriptions. Are people still buying magazines? Man, remember when that was a thing, though?

You would get monthly magazines and the newspaper delivered to your house. But if that's, yeah, if you're not using that stuff, you guys, get it out of here. club memberships, AAA. Okay, so we never have had AAA in our house except for two months ago. We just signed up. I haven't had to use it yet. So I'm up, that one's up for debate. Up for debate. Next cable TV. We have this still. Because of me. And honestly, I just thought about the other day, I think we could cut it. Ours is up, you guys, like, over $200, which is so stupid. Like, I don't know why we're so paying for it. We probably can get rid of it. So I'm going to agree at this list. I think this is one you can cut.

Streaming services. Okay, yes. We use like two consistently. The others will randomly use like once a month, and it's just not worth it. So I agree. Okay, late fees. I mean, most of the time, obviously, that's just because you forgot. So the more you can stay on top of things, the less you're having to pay in late fees. So I would say that's a good one too. All right. Checked bags. Oh, this is a good one. I am the queen of a carry-on. I can pack a carry on for pretty much any length of time. So I'm going to say push for it. Or do an airline like Southwest that you don't have to pay for check bags. So yeah, that's a fee that really hurts. I don't like paying for checkbacks. Food delivery services. Yes, this is one that you can cut.

Okay? It costs so much. We do this, you know, we'll do this every now and then. But man, it really is. If you don't have to do it, I would say skip it. New books. Oh, I like buying new books. Yeah, I don't agree with that one. A new book is just, I don't know, I love it. Landline phones. So we actually put in a landline phone like two years ago. The guy came to the house and he was like, wait, you're wanting me to put one in, not take one out? We're like, yeah, we want one. So we did it because of our kids. We wanted them to be able to, like, call grandparents and aunts and uncles if they want, or whatever it is just to get them used to, like, using a phone. And we have, like, a little laminated sheet with everybody's phone number on it.

And they can call us, like, if we're gone, and I don't know, just we implemented it into our house. And it's really inexpensive. And if you don't use it, then that's one thing. But we use it, which is so funny to say. But it's true. Our kids, they love it. Brand name products. Yeah, go generic.

That'll save you money. Manicures. Oh, man. I love a good manicure. Okay, but it is like a, it's a luxury. So if you had to cut it out, you could. I do enjoy getting my nails done. Not gonna lie.

Cleaning products. Hmm. I think some could be overpriced. I think they can really sell you on, like, how clean it is and all of that. But I think you can get really great products that aren't necessarily brand name. and they're less expensive. So do a little research there. Car washes. Yeah, I agree with that.

I can get that out of there. You got a hose. You got soap. You can do it. Paper towels. Oh, gosh. Yeah, no, I'm a paper towel user. I am. I love a paper towel and like a good paper towel. So I would keep that one on my list. Premium gas. Don't know much about cars, but I think if you have a nice car, you should get it, right? That's what I've always heard. Like, you actually want to take care of the engine. So I would say that's like an investment that you're doing to take care of your car. Now, like our minivan, I don't do premium gas. But if you have a nicer car, I always heard to do premium gas. I could be wrong. I'm not a car expert, but I would say, if you have a nice car, keep that. If not, yeah, get the cheap stuff. Okay, that was quite a list. So I, I don't know, you know, some of these,

it was a toss-up. And it really is going to depend on you. It really is. Because, again, some people think that, like, things are great. Some people don't. But I think the point is, that you can trim down your budget. I think that really is key. And speaking of, it's time to reveal the number one category that I will cut from my budget if I'm trying to save. And again, you know me, this may come as a shock, but if I really need to crack down and we have to create some margin, I will cut my clothing budget. I have one every month because I just enjoy shopping, and I don't buy, like, crazy expensive stuff or anything, but I do like the freedom to shop. It's one of those things you live like no one else, so later you get to live and give like no one else. And for me,

It's the idea that if I want a sweater, I can get a sweater. And I'm not buying 30 sweaters, but to have the freedom to do it. But if I do have to cut down, I don't need that dress or those leggings. I can. I have plenty of clothes. I'm fine. So I will trim it down. But, you know, it's a luxury for me, and I do enjoy it.

So we do find those things, and I think it's important to point out it's kind of that needs versus wants. And sometimes those wants turn into needs that aren't really needs. So keeping your emotions intact is really important. Now, another place that you guys could cut, which would save you a lot of money because I've had friends that have done this and literally saved hundreds is get rid of the Amazon app. Just that.

It's amazing. These things that come up are like, oh, we need this. We need that. We need this. I'll just buy it now, now, now. Versus if you got to go to the store and buy it, you probably will forget about it in a day or two. Maybe not need it for another month or something.

So it's the idea that it's so convenient you end up spending money. So again, it could be a hard one, but just delete the Amazon app. and it's amazing how much money you could save. Now, one app that you don't want to cut, and in fact you just want to download, is every dollar. Every dollar is a fantastic budgeting app. If you haven't made your first budget, make sure to check it out because it's free,

it's easy, you guys, and it really helps you reach your money goals. So according to a recent report from the Bank of American Institute, the cost of child care is up 32% since 2019. And that is a big jump in just four years, and I know it's a pain point, that so many of you are feeling.

And let's be real, before you have to consider daycare or child care, having a kid is already expensive from the start. From the prenatal appointments, labor and delivery costs, if you do formula and diapers, all of it, it gets expensive. But I firmly believe that if you want children, you should be able to do that no matter where you are in your financial journey. So let's talk about what to do. If you're currently feeling that tension between chasing after your money goals

and having kids and stick around because I'm answering specifically, questions about child care and money at the end. So as early as at 2024, the average daycare costs in America is around $321 a week or $16,692 a year. In addition, the average cost for an in-home care, like a nanny or an hourly babysitter, is $766 a week or $39,832 a year. That means that one year of child care costs could add up to almost double the average cost of in-state tuition. So why is this the case? Well, there are a couple of factors. There's state labor laws, so daycare centers have to hire enough adults to take care of a certain number of children.

The location and real estate costs, these are real because daycare centers, they're brick-and-mortar businesses. So if the owners have to pay rent or the mortgage, and property taxes go up or maintenance fees go up, all of that gets put on the tenant, which is the child care provider. Insurance and licensing. Daycares are licensed businesses, and they're protected by liability insurances, which factor into their overall cost of what they have to charge.

Employee training and salaries. So if you want to send your kiddo to a quality center, you'll be paying for training that it takes to keep the employees updated on safety protocols as well as a competitive salary. for quality caregivers. So if you want great people, they're probably going to cost more. High demand.

Okay, so as cities that become more populated and more households are having multiple children and multiple parents, both in the workplace, the demand is growing so much faster than expected you guys, and that means child care

is becoming really, really competitive. Now, there is federal aid, so many daycare centers receive federal aid during the pandemic, during 2020. So now that we're four years out, gaps in funding are needing to be filled. Now, before I get into the pep talk version of this episode, let's just take a moment for some empathy because I hate that this is such an obstacle for so many people.

And if I could just wave a wand and take care of the struggle for people, I would, right? I think we all would. But sadly, that's not an option, usually when it comes to our money and dealing with facts is really important, but dwelling on it, you know, and realizing, oh my gosh, how expensive. of all this is and you're feeling stretched financially, like all of it is so, so real. But you have to realize you can only control what you can control. And the fact of the matter is,

you can't control what a daycare is charging or what the government funding is or instant salary raises. Like, you can't control what it's going on out there. But what we can control is what we do with our money. And when it hits our account, deciding what we are going to prioritize. So with that being said, let's just chat through a couple of these questions. that I get all the time when it comes to child care. So the first one says, daycare for our two daughters, ages three and five, costs around

$300 a week per kids. That totals just over $30,000 a year. Is it worth it? Should I quit my job and stay home? I make $42,000 a year as a teacher, and my husband is a contractor. Okay, so this is a really valid question. It's one that a lot of couples are wrestling with. So in this case, you need to do some calculations because you might be making $42,000.

a year, but you're bringing home less than that, right? So it may even look like you're bringing home close to $30,000 a year after taxes. So is it worth adding, you know, $3,000 to $5,000 to your annual income total after you pay for child care costs? So if you enjoy working, right, and you're like, okay, this is what I enjoy, then that is one thing. But also, if you're feeling this tug of like, man, I do miss them, I would rather be home, you know, all of that, then I would say, yeah, stay home because the truth is, is the extra

$3 to $5,000 worth it to your family? And if the answer is yes, then that's one thing, but you also could make that doing an extra side hustle or something else. Maybe even watching, you know, some other kids a few times a week, that extra cash could be brought in other ways as well than the full-time job. But again, you have to weigh the pros and cons, and I think that's what's difficult, is you have to say, what are my preferences, what are my priorities, what are my values, and what are the numbers? The second question is, we have a two-year-old, and we're considering trying for a second. My husband thinks that we should wait another year till the kid will be in kindergarten by the time the other one goes to daycare so that we're only paying for one child care at a time.

Is this a silly thing to consider? I wouldn't say it's a silly thing to consider. I think you definitely could say, okay, is this worth it? But I also would say, if you're in a position that you can just say, you know, for a year, it's going to be tough. But we want to keep our family moving and going, I think that's more of a value system. question. And so for me, again, you have to look at the affordability of everything in total, but also I think there's other things that you could do to limit what's going on in your budget and in your monthly spending if you really do want to have another baby. So I feel like growing

your family is something that, yes, we'll take more money, but I also think that it needs to be a priority. And so I would say what's best for you guys. Now, again, it's going to be one year of saying, yeah, this could be really tough, but you can make it through that. first year, right? And then move on, and the child goes to kindergarten and the other one starts daycare. But you got to look at all the options. All right, the third question is, my spouse and I both love our full-time jobs. We both make good money, but my mother-in-law has made several comments about how it's bad for kids if neither of us stays home. What's your take? Oh, my gosh. I think this is the case for a lot of things in life, but I think there are people and couples that do a fantastic job

who both work, and they have great relationships with their kids. I also know some parents that they don't work as much or one stays home and they don't have a great relationship with their kids. And also the opposite. I know parents that work full time and they don't have a great relationship with their kids. You know, one parent stays home and it's fantastic. It so depends on the person. You really does. And so I think it is really difficult because I feel like women can't win. I feel like if you're in the workplace, you feel like you should be home. If you're home, you feel like you should be contributing to your household. So I think it's really a personality thing and how you're wired as well. And again, if you're getting out of debt,

there may be a season where you're working more to hit a financial goal. But overall, I hate putting black and white statements on mom's working or dad's working or both outside the home. I think it really is how your family functions the best. And I can't say what's right and what's wrong for your family. You guys really do have to decide that. And don't judge people either. That's stupid. That happens all the time. All right, the fourth and final question is, I'm a single mom with a two-month-old. I took maternity leave from my nursing job that I only have one month left, and I have no idea what to do next. Any ideas would be helpful. Oh, you single moms out there. I so applaud you guys, because this is so hard. With nursing, I think it is one thing

that your hours can be really flexible, you know, depending on what shifts you take. So if that's a consideration and what to do with child care, you know, that's one thing. Also, if you have family and friends, people are willing to help, right? It may not be a long-term solution, but if there's, like, gaps in your schedule that you need help in, reach out and ask for help. Again, single parents, it is so tough because I feel like they're the ones that are stuck in this position that, like, it doesn't feel like a lot of options. I would say, like, you know, look around, ask questions, get quotes from, you know, different daycares. Or, again, if your shifts are different than other people, someone actually may be able to come to your home for less

costs to be able to help maybe at night or something versus during the day. And again, ask for help. If you're connected to a great church, you know, talk to people, talk to people in your community, even do a nanny share, you could do that as well. But just, again, jot down some friends and family and reach out to them because single momness is no joke. It's really, really hard. All right, finally, remember that you do have to make a choice, you guys, when it comes to child care and budgeting.

And what sucks is, like, we can't control the costs. So you have to be able to say, what are we going to do in this season? And for a lot of parents, they're going down to one income because the cost of child care is literally eating up one person's income. And that's not great. We don't like that, but we do have to deal with the facts and what's going on. Or maybe you switch providers or whatever it looks like for you guys, but this is a really tough tension that a lot of people are feeling.

But the truth is, kids grow up, circumstances change, opportunities change, all of that. So just hang in there because life continues to go on, and there are seasons that are really difficult. There are seasons that are lighter. And so if you're in a difficult season, just keep going day by day. So again, just remember, you guys, your job is to take control of your finances with a budget and start getting intentional with your money. So, again, when things feel overwhelming, the most you can do is control what you can control.

And one of the best ways to do that is with a budget. Again, all of you guys that have kids out there in child care, oh, I know it can be so difficult, so, so, so hard, but you got this. All right, if you love this show, make sure to leave a review. Your feedback is so helpful. and also subscribe and share the show. Share it with your friends and your family because all of that just helps us out so much.

So thanks you guys so much for listening. And remember to take control of your money and create a life you love.