How US consumers can be smart shoppers during high inflation

US retail sales data outpaced March estimates, growing by 0.7% month over month. But while American consumers appear unfazed by inflation and higher-for-longer interest rates for now, what are some strategies to help them save more as they continue to spend?

Host of the Future Rich Podcast Barbara Ginty, CFP joins Wealth's Brad Smith to talk about the categories Americans are spending the most money on, such as housing and cars as prices rise.

"Obviously the reports are showing that we're still spending. So I think this is the time to be cautious and reevaluate your budget and take into account inflation, which we still have out there," Ginty tells Yahoo Finance. "So your dollars are not going as far or lasting as long as they used to be. and so it's, I think, a good time to be cautious about overuse of credit card and the new phenomenon of 'buy now pay, later,' — which is always at a point of sale, and I don't think that's meant to be a point-of-sale decision."

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This post was written by Luke Carberry Mogan.

Video Transcript

- Well, the consumer remains resilient to retail sales topping Wall Street expectations, continuing its upward trend by rising 7/10 of a percent in March compared to 4/10 of a percent that was expected. But inflated prices are still impacting the cautious consumer and their household budgets. So how can you be a smart shopper in times of sticky inflation?

Let's bring in Barbara Ginty who is the host of Future Rich Podcast. Barbara, great to have you here with us today. Let's turn this from potential wealth into kinetic wealth for a lot of folks out there who are trying to figure out how they can be smart shoppers. Where are the areas that we saw within this retail sales report that show that there are still deals to be made out there?

BARBARA GINTY: I think that the average consumer, right now, is stretched pretty thin, but obviously, the reports are showing that we're still spending. So I think this is the time to be cautious and reevaluate your budget and take into account inflation, which we still have out there.

So your dollars are not going as far or lasting as long as they used to be. And I think a good time to be cautious about overuse of credit card and also the new phenomenon of buy now, pay later, which is always at a point-of-sale, and I don't think that's meant to be a point-of-sale decision.

- That's interesting. And the way that consumers are spending, I mean, we repeatedly get even more information about where consumers are leveraging cash versus just swiping or tapping to pay. I wonder what you make of that.

BARBARA GINTY: Yeah, so they're tapping to pay, I would say, for the depreciating items and they're using cash for the expenses that need to be paid in cash, right. So for housing, daycare, food, usually, those are ones that are going to be paid in cash. And obviously, those with children know that aside from housing costs being at all time high, with still having a higher interest rate. So those who locked in that 2.5% COVID mortgage still being sticker shocked by what a mortgage cost now, closer to 7%. But those with children are having those extreme daycare costs, which can be more than a mortgage.

- It's particularly interesting--

BARBARA GINTY: Those are your typical cash expenses.

- Right. And it was particularly interesting in the consumer confidence, the most recent reading that we found for March. On a six-month basis, buying plans, for interest rate-sensitive items like autos, homes, big ticket appliances, dipping once again here. And so where are the areas that consumers can certainly find some deals out there and perhaps be able to take advantage of the environment right now?

BARBARA GINTY: I think the cars have also gotten very expensive. But I think it's important to try and wait for a sale. First of all, with credit unions, you'll see auto loan sales, and then also when you're going to shop for a car, they want to move inventory, right? So you just have to go in there and know your price point and then be willing to stick to it. And you have to be willing to walk away from the table. So if they're not going to give you the deal you want, you have to be willing to walk away.

But those big ticket items are items where you can really negotiate and get the price that you're looking for, which makes all the difference for your budget.

- It's particularly interesting, especially as you were writing about getting rich quick akin to gambling here, and I'd love to pivot the conversation in that direction. Break that down a little bit more for us and take us into your thesis there.

BARBARA GINTY: So my thesis is that there is no real quick way to accumulate wealth. I mean, if you study entrepreneurs and you study successful people who have achieved real wealth-- financial independence is what I consider real wealth, with the decision where you don't have to go to work anymore, where you're in charge of all decisions in your life. Whether or not you stay in a relationship, whether or not you stay in a job, that's financial independence. Having full control over your life. And that doesn't happen overnight.

We see all the phenomenons, right. Like GameStop, very few people became millionaires out of that. That was very rare occurrence. Usually, what it takes to build real wealth and build financial independence is doing the consistent, boring thing, which is saving on a regular basis, living within your means, and allowing compounding of interest to work for you and not against you.

- All right, Barbara, I've been trying for years just to Rebecca Black my finances and just come out with a one-hit wonder type of scenario that, perhaps, can create some type of windfall. I don't know. I'm still trying to figure out what my tune is going to be. We'll workshop--

BARBARA GINTY: Let us know if you find the one-hit wonder.

- You will know about it. It'll be top of the charts. Barbara, thanks so much for taking the time here. Barbara Ginty, who is the CFP and also host of Future Rich Podcast. I appreciate it.

BARBARA GINTY: Thank you.