Creating and maintaining a budget is one of the best ways to achieve your financial goals. However, even the most dedicated savers can find it challenging at times. That’s why it’s essential to revisit your budget and financial plan every six months. This financial check-up is your opportunity to get back on track before you stray too far from your goals.
The six-month financial check-up is even more crucial today as inflation continues to decrease the value of your money. With less money to spend, it’s important to find ways to maximize your hard-earned dollars.
Consider the following inflation-fighting strategies when performing your financial review.
Keep on Saving
It’s hard to save money or keep your saving at your current level when inflation hits. As prices rise, your same expenses require more of your money. You should aim to keep saving money each month. Yet, if you find it’s difficult to save the same amount as before, try decreasing the amount temporarily. If you save 15% of your take-home pay monthly, drop it to 12% or even 10%. Only reduce what is necessary and try to make the reduction short-term, if possible.
Adjust Your Budget
When you’re spending more and saving less due to inflation, it’s always a good idea to adjust your budget. Look for obvious areas to cut spending, such as entertainment and dining out. These are categorized as wants. You can also label them as variable expenses. They vary each month. For example, stop your streaming services like Netflix or Spotify temporarily. Cut back on buying lunch or going out to dinner. Small charges add up quickly. Then, try to uncover other savings opportunities. While many companies are raising prices, others realize their customers are struggling and are offering discounts and lower-tier options.
Get a Better Credit Card
Most credit cards today have variable interest rates. This means the interest rate will fluctuate with the economy. As the Federal Reserve continues to raise rates to fight inflation, credit cardholders are noticing their interest rates jumping as well.
Fighting inflation as a consumer means making the most of every dollar. That includes decreasing the amount you pay in interest on credit cards. If your interest rates were already high on credit cards, they’re even higher now. Most rewards cards carry higher interest rates. Instead, focus on finding a lower-rate credit card – especially if you cannot repay the balance in full each month.
Revisit Your Investments
Increased market volatility has many investors on edge. If you haven’t already, now is the time to schedule a meeting with your financial advisor. If you’re nearing retirement, your emotions are probably running high as most investors are taking significant losses right now. Switching to more conservative investment opportunities might be a good strategy.
On the other hand, if retirement is decades away for you, it might be an ample opportunity to increase your investments. Many people equate sudden market drops to buying stocks on sale.
Regardless of your age and financial goals, speaking with your financial advisor first is always wise. Making sudden decisions during periods of high market fluctuations could jeopardize your savings or cost you more in taxes.
Maximize Your Grocery Budget
With prices rising on just about everything on the shelves, finding ways to make your grocery funds go further is essential. Review these tips before your next trip to the grocery store:
- Consider generic food brands and medication.
- Download payback apps like Ibotta or Fetch where you can scan receipts for rebates or points.
- Don’t stock up on items or buy them simply because it’s on sale. Only buy to replace something you’re out of.
- Leave the kids at home to prevent impulse buys.
- Prevent overspending by making a list before you shop – don’t go off the list!
- Comparison shop – if you usually go to one store, start looking elsewhere for sales or cheaper prices.
- Buy in bulk to cut down on per unit costs. You can even split bulk items with friends or family.
- Cut down on disposable items like baggies, paper lunch bags, and paper towels. Think about investing in reusable containers, lunch boxes, and washable spill rags.
- Use grocery store apps that let you add items to your cart before actually checking out. It’s helpful to see your total as you add items to your cart. This strategy makes sticking to a budget much easier and allows you to identify items that eat into your budget.
Sell Before You Buy
Make a habit of selling unused or old items before you buy new ones. Go through closets to find old clothes you or the kids never wear or are too small. Then, sell them on places like eBay, Poshmark, or at local consignment shops. When you’ve made some money, use those funds to buy new items. Think of it as a one-in-one-out policy.
You can do the same with kids’ toys. That is, sell an old toy before buying a new one. Check out eBay, Facebook Marketplace, and Craigslist to sell used items online. You may even consider buying used items yourself if you want to make your budget go even further.
You could also have a garage sale. Kids toys and clothes are extremely popular. Start putting items aside and shoot for peak garage sale season in your area. In the northeast, it’s typically spring months like April, May, and June. To make it worthwhile for shoppers, get a few neighbors to have one at the same time, and tell your family and friends to bring over some items too.
Prepare for the Holidays Now
While the holidays are still a ways off, they’ll be here before you know it. Unfortunately, rising prices will only make the season more stressful. The best way to save money and reduce holiday spending is to plan now.
Prices tend to rise before the holidays in general, then stores offer discounts to boost sales since you think you’re getting a deal. With prices already jumping, it’s wise to begin your shopping now.
If you typically travel over the holidays, consider purchasing tickets earlier this year to lock in better prices. Set price alerts on travel sites like Airfarewatchdog or Kayak so you know when prices drop. Any preparations you can make now to save money will help keep the holidays merry.
We’re Here to Help!
Everyone feels the effects of inflation. Adjusting your budget and finding ways to maximize your hard-earned dollars are essential. That may include locking in a lower-rate credit card, refinancing loans at lower interest rates, consolidating debt, or opening a holiday savings account.
If you’re performing a six-month financial check-up and are interested in these services or have questions, we’re here to help. Call, text, chat, or stop in! Our team is available M-F, 9am-4pm ET. (315) 671-4000.
Each individual’s financial situation is unique and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.