How to Financially Prepare for Tariff Price Increases

1. Reduce Discretionary Spending

Cutting back on nonessential expenses is one of the most immediate ways to free up money in your budget. Discretionary spending includes things like dining out, entertainment, subscriptions and impulse purchases.

Start by reviewing your monthly expenses and identifying areas where you can temporarily reduce spending. Cancel unused subscriptions, limit takeout meals and find free or low-cost entertainment alternatives. Even small reductions can add up to significant savings over time.

Tip: Consider implementing a 24-hour rule for nonessential purchases. This waiting period can help you avoid impulse buying and determine whether you truly need an item.

2. Create or Add to an Emergency Fund

An emergency fund serves as a financial cushion when unexpected expenses arise or when higher prices strain your budget. Financial experts typically recommend saving three to six months' worth of living expenses in an easily accessible savings account.

If you don't have an emergency fund yet, start small by saving $500 to $1,000 initially. Once you reach that goal, gradually work toward the larger target. Even a modest emergency fund can provide peace of mind and financial flexibility when prices increase. Just be sure to replenish your savings if you need to use the funds so you'll be covered if a larger emergency, such as a sizable car repair or job loss, arises. Or, consider keeping a separate savings account specifically to help with increased costs.

When deciding where to keep your savings, consider high-yield savings accounts that can help your emergency fund grow faster through higher compound interest. Keep this money separate from your checking account to reduce the temptation to spend it on nonemergencies.

3. Stock Up on Nonperishable Essentials

Purchasing nonperishable items before potential price increases can help you save money in the long run. Focus on items you regularly use that have long shelf lives, such as cleaning supplies, toiletries, canned goods and household products.

Be strategic about your stockpiling approach, though. Only buy items you'll actually use and have adequate storage space for. Also, calculate the potential savings versus the upfront cost to ensure you're making financially sound decisions.

Tip: Avoid hoarding or buying items you don't typically use. This can lead to waste and tie up money that could be better used elsewhere in your budget.

4. Lock In Prices on Big Purchases

If you're planning major purchases like appliances, electronics or home improvements, consider making them sooner rather than later. Locking in current prices can help you avoid potential increases that may result from tariffs.

That said, it's best to avoid unnecessary purchases just to beat potential price increases, as this can strain your budget and reduce your financial flexibility. Instead, focus on spending you were already planning to make within the next year.

5. Research Domestic Alternatives

Tariffs typically apply to imported goods and components, so domestic products may become more competitively priced. Take time to research alternatives for products you regularly purchase that are sourced and made in America.

Additionally, buying domestic products can support local businesses and may offer benefits like easier returns or customer service.

6. Use Coupons and Credit Card Rewards

Coupons, cash back programs and credit card rewards become even more valuable when prices are rising. Take some time to develop an approach to finding and using these money-saving opportunities.

Options include:

• Sign up for store loyalty programs.
• Download apps that offer digital coupons and cash back.
• Sign up for online cash back websites like Rakuten, Ibotta or TopCashback.
• Choose credit cards that offer rewards in categories where you spend the most money.
• Check for other online and in-store offers in your credit card mobile app.
• Pay off balances in full each month to avoid interest charges that could negate your rewards.

7. Pay Down High-Interest Debt

High-interest debt becomes even more burdensome when living costs rise, so paying down credit card debt, personal loans and other high-interest obligations can free up more money in your monthly budget.

Consider using the debt avalanche method of debt payoff by prioritizing debts with the highest interest rates first. This approach typically saves the most money over time. Alternatively, the debt snowball method focuses on paying off the smallest balances first, which can provide psychological motivation.

If you have good credit, it could also make sense to consolidate your debt through a personal loan or balance transfer credit card with a lower interest rate. This can reduce your monthly payments and help you pay off debt faster, but be careful not to accumulate new debt on the cleared accounts.

8. Diversify Your Income Sources

Having multiple income streams can provide additional financial security when living costs rise. Consider developing side hustles or passive income opportunities that can supplement your primary income.

Popular side income options include freelance work, online tutoring, selling items online or using your vehicle for ridesharing or delivery services. Choose opportunities that align with your skills and available time.

You might also explore ways to monetize existing assets, such as renting out a spare room or parking space. Even small amounts of additional income can help offset higher prices and improve your overall financial resilience.

Control What You Can

Tariffs are outside your control, but your response isn't. By making thoughtful choices now, you can stay ahead of rising prices and minimize financial stress.

Building and protecting your credit can also be a smart long-term move. A strong credit profile can help you qualify for better rates and financing options if rising prices or other circumstances require you to take on debt. Experian's free credit monitoring service can help you stay on top of your credit, get insights into how to improve your score and spot potential issues early.