Yahoo Finance 6 Ways To Improve Your Financial Outlook, Despite High Costs
Some financial experts refer to inflation as the “silent tax.” You don’t see it come out of your paycheck or savings, but it drains their value nonetheless.
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Inflation also impacts everyone across the financial spectrum. The rich, poor, and everyone in between notices the effects of inflation.
So in the wake of high inflation over the last few years, how can you improve your financial outlook no matter where you fall on the socioeconomic spectrum?
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1. House Hack
Housing makes up the greatest expense for nearly everyone on the planet. It therefore offers the single greatest opportunity for saving money — especially if you can knock it out entirely by house hacking.
“House hacking involves buying a multi-unit property with up to four units, using traditional mortgage financing,” explained Lane Forehetz, founder of Fast Lane Real Estate. “An FHA loan, which requires only 3.5% down, can make this affordable, often needing less than $10,000 out of pocket.”
“By living in one of the units and renting out the others, you can offset your mortgage or rent payment, significantly increasing your monthly savings,” Forehetz said. You can use the future rents from the other units to help you qualify for the mortgage.
Not ready or interested in buying a new home? Seamus Nally, CEO of TurboTenant, recommended finding ways to house hack your current home.
“For example, turning a room or section of your home into an Airbnb lets you get started without the financial undertaking of traditional real estate investing. With a consistently profitable stream of passive income like that, the money earned can be used to move you upwards financially, helping you do things like pay off your loans, building your savings, and kicking off your investment journey.”
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2. Meal Plan To Reduce Grocery Spending
Grocery costs have risen a staggering 25.8% since the last presidential election. That’s pinched most Americans, whose paychecks have not kept pace.
“I plan meals ahead for the week and only buy the groceries that I need for those meals,” said Annie Cole, money coach and founder at Money Essentials for Women. “This has helped me cut hundreds off my monthly grocery bill versus walking through the store without a plan.”
“I buy a lot of affordable staples (rice, potatoes, vegetables) and plan meals around them. When I do buy more expensive items like meat, I’ll use portions of it across multiple meals,” she added.
3. Research Food Assistance
Cole continued to explain that more people qualify for various types of grocery assistance than they realize. “Low-income individuals may qualify to receive a monthly meal stipend from the Supplemental Nutrition Assistance Program (SNAP).”
“Many also qualify for the Women, Infants, and Children (WIC) Nutrition Program, which includes a stipend for certain high-nutrition foods for children and pregnant women. Finally, don’t forget that there are thousands of food banks across the United States that provide hot meals and pantry items to families in need. Go to FeedingAmerica.org to find a food bank near you,” she added.
4. Values-Based Budgeting
Most people don’t realize all the leaks in their budget — the places they spend money unintentionally.
“I’ve drastically cut down on my random shopping purchases over the last few years,” explained Cole. “I used to be someone who would buy new clothes a few times a month, or go to Sephora to buy something new and fun. Today, I spend the majority of my money on the basics and things that bring me true joy on a budget: books, meals with friends, and a cheap gym membership. I’ve never felt so fulfilled while spending so little money.”
“Pick over your spending over the last three months with a fine-toothed comb, categorizing every dollar spent. You probably won’t like what you find, but that’s the point: it’s a wake-up call to get more intentional with your spending and budgeting,” she said.
5. Automate Savings
It’s hard to spend money you can’t access. Explore ways to automate your savings, making it the first “expense” that comes out of each paycheck.
“Prioritize saving and investing if you’re not already doing so,” urged Erika Kullberg, personal finance expert and founder of Erika.com. “Even a small, regular contribution to a diversified investment portfolio is a great step forward. Automating these contributions can be a useful way to improve consistency when it comes to your savings.”
You can automate your savings by having your employer split your direct deposit into multiple accounts. If they can’t do that, schedule automated recurring transfers to leave your checking account within a day or two of each payday.
6. Create More Income
You can grow the gap between what you earn and what you spend in two ways. You can (and should) spend less of course, but you can also come at the problem from the other direction: growing your income.
“Over the years, I’ve always looked for ways to increase my income,” said Cole. “I always negotiate for the highest salary when switching jobs, and I don’t hesitate to ask for raises. I’ve also switched jobs at times when I had maxed out the growth opportunities there.”
“Additionally, I’ve done online surveys to make extra cash, done gig work (academic editing in my case), and launched my own business that creates income through one-on-one coaching, online courses, affiliate commissions, and book royalties. There are endless ways to create money online if you’re looking to add some extra income!” she concluded.
Final Thoughts
R.J. Weiss, certified financial planner (CFP) and CEO of The Ways to Wealth, suggested his clients focus on the fundamentals.
“Set a meaningful short to medium-term financial goal, like saving for a vacation or paying off high-interest debt. Then, write out a list of easy, manageable steps you can take within the next 30 days to help you accomplish this goal. Focus on what you can control and build your financial muscle for making changes.”
“Track your progress by setting specific metrics, such as growing your net worth or reducing your debt balance. The goal is to make consistent improvement over time. Write off past mistakes as learning experiences, and concentrate on making your financial situation better day in and day out, month after month,” he said.
Do that, and your financial outlook can’t help but improve.
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