Inflation is a topic that often comes up in the news, but what does it really mean and how does it impact your budget? Let’s take a closer look.
What Is Inflation?
In a basic terms, inflation is when the price of goods like food, gas, or clothing go up over time. When that happens, your money doesn’t buy as much as it did before.
For many years, inflation wasn’t a major concern. Prices went up slowly, and most people didn’t really notice. But after the COVID pandemic, prices increased much faster. In 2022, inflation hit 9.1%, which was the highest it had been in 40 years.
Now, in 2025, inflation has slowed down to around 2.3%, but prices are still higher than before. So let’s look at why inflation happens and how you can manage your finances when the cost of every day living goes up.
What Causes Inflation?
There are three main types of inflation:
- Demand-Pull Inflation: When a lot of people want to buy something, but there isn’t enough supply, the price goes up.
- Cost-Push Inflation: When it costs more to make or transport goods, those costs get passed on to shoppers.
- Monetary Inflation: When there’s more money going around, people spend more, which can make prices rise.
Sometimes, prices and wages will increase together, pushing each other higher. To stop this, the government raises interest rates, making it more expensive to borrow money. That usually slows spending and helps control inflation.
Real World Effects of Inflation
- Your purchasing power goes down: You might pay more for the same things. Alternatively, you might get less of something for the same price; this is known as shrinkflation.
- It’s harder to save: Inflation makes it harder to save money, and even the money you are able to save may not go as far.
- Borrowing costs more: When interest rates go up, loans and credit cards become more expensive to use.
How to Manage Your Budget During Inflation
Managing your budget during times of inflation can be challenging, especially if you’re paid per project. However, there are practical steps you can take to stay on track:
- Pay down debt: If you have credit cards or loans with high interest rates, try to pay them off as quickly as possible. You may want to consider combining your debt into one monthly payment with a lower rate by applying for a personal loan.
- Make a budget: Write down how much money you earn and spend each month. Look for ways that may help you spend less, like buying in bulk or switching to store brands.
- Start saving: It’s important to build an emergency fund for unexpected expenses. You can also look into savings accounts with higher interest rates, like a term certificate or money market account.
We’re Here to Help
Inflation can be tough to deal with, but First Entertainment is here to support you with financial products tailored for entertainment professionals – including savings options, personal loans, and everyday banking products to make daily life easier. We also provide financial education resources to support smart budgeting and long-term planning.
