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As the global supply chain crisis continues to affect the U.S. economy, a wide range of resources and products remain scarce. Americans may find more empty shelves in their local grocery stores—a familiar sight for those who shopped in stores during the peak of the pandemic in 2020. And while grocery stores try to address the food shortage, the breakdown in the supply chain has resulted in numerous other shortages nationwide, including chip shortages and coin shortages.
As a consumer observing the impact of this crisis on society, you may be wondering how you should respond to these circumstances. As some stockpile their shopping carts with ludicrous amounts of toilet paper, entrepreneurs attempt new ways to capitalize on this market, and others may simply hope for the best—what is the right way for you to prepare?
As we approach 2022, budgeting and taking proactive steps to safeguard your household can make all the difference. In this blog, we’ll share some practical ways for you to budget, invest, and save amid nationwide shortages.
7 tips to help ensure financial security for your household during the shortage
1. Store funds into a liquid bank account
During a crisis, the market can be unpredictable. That’s why you may want to store your funds in a reliable location that doesn’t fluctuate with the market. According to Investopedia, turning to liquid assets or a liquid bank account in a crisis will allow you to withdraw without losing value.A When emergencies arise, you’ll want to be able to access your money quickly—think easy access to checking accounts or savings accounts.
If you choose a high-yield savings account, you can also benefit from the easy accessibility of these funds while also taking advantage of the accrued interest. The Flare Account®1 allows members to earn up to 6.00% annual percentage yield (APY)2 with qualifying direct deposit activity.1 With this account, you can put money into a savings account and earn more in interest than a traditional savings account.
2. Add more to your emergency fund
If you have not yet saved three to six months’ worth of expenses into an emergency fund, now is the time. In fact, it wouldn’t hurt to save a little extra if you are experiencing financial uncertainty or anticipate potential challenges for you or your family in the near future. According to Nerd Wallet, if your job is directly tied to the economy, then saving a bit more during an economic crisis may be wise.B If the shortage progresses, you’ll be glad you saved when you did.
If you’re expecting a substantial tax refund upon the completion of your income tax return for 2021, it may be a good idea to hold onto these funds or add them to your emergency fund. For instance, if you are a parent eligible to receive the recently enhanced Child Tax Credit, the refund from this credit could help pay for necessities for you or your household should circumstances worsen.
3. Hold off on treating yourself with costly purchases
There’s nothing wrong with treating yourself when the timing is right. However, spending big money on vacation or even personal gifts amid a nationwide shortage may not be the most responsible decision, especially if these items are even more costly due to the circumstances. During times of crisis, “needs” are priority number one, with wants and wishes on the back burner. Don’t worry—if you’re wise and frugal during this shortage, there should be time to treat yourself in the future!
4. Ration and Budget
The supply chain only works efficiently if all moving parts are working together efficiently. If just one step of the process falls behind, it ripples up the supply chain. As demand goes up the issue for many industries is the lack of laborers. In fact, a 2021 report from Forbes shared that supply chain disruptions have resulted mostly from a lack of laborers as opposed to transportation bottlenecks.C Regardless, these disruptions ultimately affects the costs of shipping and distribution. And as prices for manufacturing and distribution go up for businesses, where do the costs go? Unfortunately, to you—the consumer. You can expect a spike in costs for many common, everyday items, especially food.
As a result, be prepared to budget more for food each month. For products in high demand and short supply, you can ration the number of these products your household purchases and consumes. Also, if you tend to be rigid in your selection of foods, now would be a good time to start practicing flexibility and introduce a little more variety to your palate. Being open to more readily available and cheaper alternatives can make a big difference for your wallet!
5. Don’t stop monitoring monthly expenses
Once you have set a budget, you’ll need to continue to monitor your monthly expenses. Even if you stick to your initial budget, the disruptions in supply chain can increase product prices or make products you normally buy unavailable.”. For the first few months, you may be able to save money by purchasing certain products, but what happens when that changes? As circumstances change, you’ll need to adapt your plan to accommodate your household’s needs. As prices go up for particular items, be ready to look for alternatives. Adaptability is key in a shortage.
6. Be patient with the chip shortage and avoid scalpers
According to a report from CNBC, the severity of the global chip shortage has risen, affecting millions of people worldwide due to the use of semiconductor chips in common, everyday items.D You may be surprised by the number of electronic items in your household that utilize a chip. From your phone to your tumble dryer to your vehicle—these electronic devices can all use chips. That’s why the chip shortage affects so many parts of our economy. And as demand is going up this year, disruptions in the computer chip supply chain will become more apparent. If possible, try to hold off on purchasing electronics that you may not necessarily need. If you have the option to buy these items later, you may be able to buy them for a better price.
And avoid purchasing electronics from scalpers at all costs! These individuals purchase large quantities of in-demand products, causing them to sell out, so they can personally sell them for a higher price due to the lack of supply. While it’s tempting to purchase products from private sellers when major retailers have sold out of them, practicing patience to ride out this chip shortage and purchasing electronics at a later date could save you some bucks.
7. Don’t do it alone.
Developing a support system for you and your household can be vital to your financial security and mental health. Do you have a friend who loves to garden and has a surplus of fresh vegetables in their backyard? How about a friend who is a mechanic and can help you repair or service your vehicle? The costs of everyday products and services will go up during a shortage and having a community around you with each member pitching in can make all the difference.
Bartering amongst one another helps to ensure that everyone has what they need and can save you money! If you have an excess of certain items but lack other essentials, you can trade goods. Don’t be afraid to barter with your friends or neighbors!