Nobody knows how much of a financial impact the drought will have in the coming months and even years, but unless the weather changes drastically, the effects are likely to be well into the billions of dollars. Some economists fear that the drought may have significant impacts on the economy, affecting middle class consumers barely getting by in this already challenged economy.

The U.S. Department of Agriculture released food inflation forecasts that suggest that consumers won't feel the effects of the drought until 2013 but without knowing what those effects will be, lifestyle changes may be necessary. Think about these basic ways of fighting the effects of the drought.

Change What You Eat
The USDA predicts that the price of food could increase from 3% to 4%. If farmers harvest fewer crops this fall, that will affect almost all food products. With the price of meat already more expensive than other foods, consider eating less expensive cuts of meats and compare the price of frozen vegetables to their fresh counterparts. The price of pasta will likely rise, but it will still be cheaper than meat.

Change Where You Eat
Regardless of how much your grocery bill increases, it will still cost less than eating out. Some restaurant owners are already looking for ways to mitigate the effects of rising food prices without a significant rise in prices, but that may be nearly impossible.

Cut Your Home Energy Consumption
It's not only dry, but it's hot and that causes a rise in energy bills. Look for small ways to save on electricity, like turning off computers and TVs when not in use, unplugging cable boxes on seldom-used TVs, making sure your dishwasher and washing machine are full before running them and switching to energy efficient bulbs. Little actions add up.

SEE: Ways To Slash Your Home Energy Bill

Rework Your Budget
First, if you don't have a household budget, it's time to make one, but if you do, you likely have a line built in for unexpected expenses. Since nobody knows the effects of the drought, consider upping that unknown line, increasing your emergency fund and finding other places to trim.

Make Your Home Fire Safe
If you live in a drought-stricken area, is your home as fire-resistant as possible? Don't smoke outside where grass may be water-starved, keep foliage clear of your air conditioner, double-check your smoke alarms, keep recreational fires in fire pits placed on cement or asphalt and make sure a fire extinguisher is close by if you're doing anything outside that's potentially flammable.

Stop Worrying About Your Lawn
You may love your beautiful lawn, but fighting the effects of a drought this severe can be costly and even illegal. There will be future years to be the pride of your neighborhood, but for this year, let things go a bit and save that money for other expenses.

Eliminate the High Priced Vacation
It might be too late for this year, but going to a more local vacation spot could put money back into your budget for rising food and energy costs. If the effects of the drought are less severe than expected, you can go on a dream vacation next year.

SEE: 7 Ways To Save On Summer Getaways

Take Care of Yourself
It's hot and dry and that has a taxing effect on even the most physically fit of individuals. Stay inside and do outside activities later at night or earlier in the morning. A trip to the hospital for dehydration is expensive, so be mindful of the dangers presented by the drought.

The Bottom Line
History shows that many doomsday forecasts end up being far less severe than predicted, but when preparing financially, it's much better to have too much money saved than not enough. If it ends up not being as severe as expected, use that extra money to pay down debt or put a little extra money toward your retirement plans.

Related Articles
  1. Home & Auto

    4 Areas to Consider Roofing Material Types

    Roofing your home is very important, that’s why you should choose a roof specifically designed to handle your area’s climate.
  2. Budgeting

    The 5 Most Expensive States for Child Care

    To get a better sense of how child care costs can fluctuate, here's a look at the costs of child care across the country.
  3. Home & Auto

    Looking To Invest In Home Improvements?

    Some home improvement projects could cost you more to complete than they’ll pay out in equity. So, here we show you the worst projects to avoid.
  4. Fundamental Analysis

    Understanding the Internal Rate of Return Rule

    The internal rate of return rule is a popular method used to compare investments or projects.
  5. Home & Auto

    Are Home Inspections Worth It? - Price vs. Value

    If you’re wondering whether home inspection is worth the investment, the following information will help you decide.
  6. Budgeting

    How to Defray Long-Term Care Expenses

    Here's a handful of options on what you can do to defray long-term care expenses.
  7. Budgeting

    The True Cost of Home Caregiving

    Caring for eldery family in-home might be unavoidable, but most caregivers don't realize the true cost of doing so.
  8. Budgeting

    Is Level Money the Perfect Budgeting Tool?

    Here’s a detailed review of how Level Money works and whether it could be the perfect tool to help you budget.
  9. Economics

    Explaining Budget Surplus

    Budget surplus is an economic term describing a situation where revenue exceeds expenditures.
  10. Savings

    Millennials' Money Habits: How to Help

    Millennials gleaned much of their financial savings habits from their parents. Here's where they could use some help.
RELATED TERMS
  1. Internal Rate Of Return - IRR

    A metric used in capital budgeting measuring the profitability ...
  2. Coastal Barrier Improvement (CBI) ...

    A federal law that makes federal disaster relief and federal ...
  3. Catastrophe Reinsurance

    Reinsurance purchased by an insurance company that reduces the ...
  4. Hurricane Deductible

    An amount a homeowner must pay before insurance will cover the ...
  5. Liquefaction

    A loss of stability and strength in water-saturated soil due ...
  6. Debt Consolidation

    The act of combining several loans or liabilities into one loan. ...
RELATED FAQS
  1. How does a bank determine what my discretionary income is when making a loan decision?

    Discretionary income is the money left over from your gross income each month after taking out taxes and paying for necessities. ... Read Full Answer >>
  2. What is the range of deductibles offered with various health insurance plans?

    A wide range of possible deductibles are available with health insurance plans, starting as low as a few hundred dollars ... Read Full Answer >>
  3. How do I know how much of my income should be discretionary?

    While there is no hard rule for how much of a person's income should be discretionary, Inc. magazine points out that it would ... Read Full Answer >>
  4. What proportion of my income should I put into my demand deposit account?

    Generally speaking, aim to keep between two months and six months worth of your fixed expenses in your demand deposit accounts. ... Read Full Answer >>
  5. How do I use the rule of 72 to estimate compounding periods?

    The rule of 72 is best used to estimate compounding periods that are factors of two (2, 4, 12, 200 and so on). This is because ... Read Full Answer >>
  6. How much risk is associated with subprime mortgages?

    A large amount of risk is associated with subprime mortgages. Since the mortgages are specifically for people who do not ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!