5 Challenges to Budgeting in 2022

The American economy took some blows in 2021. The Consumer Price Index – a measurement of how much urban consumers pay for goods and services – climbed ​0.8 percent​ in ​November​, part of a ​6.8 percent rise​ over the previous 12 months. What's a consumer to do? You can't live without the basic necessities of life, so you'll have to find ways to cram them into your budget as they expand.

Challenge No. 1 might be keeping that roof over your head. The bad news here is that housing prices are among the slowest expenses to drop after an increase. Not only that, but rent eats up a hefty percentage of the average monthly budget, particularly for low-income earners and families.

You might be able to slash your monthly rent in half by taking in a roommate. Hone up your negotiating skills if your lease is about to come up for renewal. You may be able to convince your landlord to ease back on a rent increase if you've been a model tenant for a period of time.

​Consider also:​ The Advantages & Disadvantages of Living With a Roommate

Eating is another major must-pay expense, but this is one challenge that you have a good bit of control over. No, you don't have to go on a starvation diet, but you might consider easing back a wee bit on the finer tidbits to make ends meet. AARP reports that the price of steak ratcheted up ​10.7 percent​ from 2020 into 2021. That can make hamburger ­– or at least a less pricey cut of beef – seem a bit more appetizing. Buy store and generic brands and don't overlook the cost-saving value of coupons.

And that brings us up to the coronavirus craze of hoarding. What if you stumble across a great sale on toilet paper or another non-perishable product? It's one thing to buy up 42 packages just in case the ongoing pandemic prevents you from ever leaving home again. That's frowned upon, but it's perfectly acceptable to buy two of something that's available at a very nice discount so you don't have to dig deeper into your pocket to buy the next batch.

Energy costs are another must-pay-for challenge, particularly if you don't live in a moderate climate. Look into the Low Income Home Energy Assistance Program for assistance with paying your heating bills if money is really tight for a while, maybe because you've lost your job.

It goes without saying that you'll want to turn lights out when you leave a room, but don't neglect to unplug appliances and electronics when you're not using them, either. Many suck up energy even when they're not turned on.

Transportation costs can be another pricey component of the average budget. Consider streamlining your driving. Do errands on your way home from work rather than fire up your wheels to do them on your day off. Reach out to friends, acquaintances and coworkers to find out if anyone is interested in carpooling to cut costs.

And touch base with your auto insurance company. Raising your deductible can reduce your premiums, but this is only a good idea if you're reasonably sure that your risk for a fender bender is low.

​Consider also:​ What's Happening With Gas Prices & Your Holidays?

Many American workers have too much income tax withheld from their paychecks. It's a move that can make some sense because you don't want to be hit with a surprise tax bill at year's end. But the catch here is that the IRS doesn't pay you interest for holding onto your money for you until tax time. The IRS will simply return your extra money to you by way of an interest-free refund if your tax liability is $40 a week but you're having $50 withheld just in case.

The current Form W-4 can help you with your calculations so you're having the right amount withheld, or very close to it. It's been upgraded in recent years with worksheets and a link to an estimator.