Yahoo Finance What Recession? These 8 Budgeting Strategies Will Relieve Your Wallet From Economic Pressures
Sometimes it seems as though there is no end in sight when it comes to rising costs of living and growing inflation percentages. Rather than stress out about dwindling savings and increased credit card usage, however, savvy consumers can implement planning and budgeting strategies to relieve their wallets from current economic pressures.
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Take advantage of these strategies now and enjoy a bit of financial peace of mind.
First, Make Sure You Have a Budget
One of the most basic pieces of advice for those struggling during financially stressful times is to budget. But do you actually have a budget? Consumer finance expert Tanya Peterson at Freedom Financial Network said not everyone does.
Before you make any money moves, your first one should be to create a budget. While budgets should be based around short- and long-term goals, Peterson said if you are putting one together right now, it can make sense to focus on the shorter term. Determine where your, or your family’s, vulnerabilities may be such as prioritizing preemptive maintenance needs on an older car.
Once you have a budget, review it frequently especially if it has a short-term focus. Peterson said this may mean looking at budgeted amounts versus actual expenditures every week or every two weeks.
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This is the question Emily Irwin — managing director, advice and planning, at Wells Fargo’s Wealth & Investment Management — wants consumers to ask themselves as they reexamine their budgets.
Irwin uses the example of using this as an opportunity to learn to negotiate with discretionary providers. Think cellphone providers, cable and streaming services, gyms and more. If these companies are offering any negotiable promotions for new customers, reach out and learn more.
Try the 80/20 Budgeting Approach
Lauren Anastasio, director of financial advice at Stash, knows budgeting can quickly become overwhelming and complex. If you need help staying on track, Anastasio recommends trying out the 80/20 approach. This suggests saving 20% of your income and living off of the rest.
Reassess Debt and Fixed Expenses
Are you in the market for a new home? Irwin said now may be the time to start looking since rents are more likely to rise with inflation. Potential homeowners may have the opportunity to lock in a relatively low, 30-year interest rate. If you’re not ready to look for a new home or have plans to stay put, Irwin recommends evaluating if refinancing makes sense.
Evaluate Big Purchases
Is now “really” the time to purchase something significantly expensive? Do you really need to replace your car or refrigerator if both are currently working well? Take a moment to carefully think about whether or not you need to make a big purchase.
If you do decide now is the time, Irwin recommends investing in quality products that will likely require less maintenance or have lower ongoing expenses and last longer.
Hit Unsubscribe From All Marketing Emails
If you need to cut back on unnecessary spending, the fastest way is to unsubscribe from all the marketing emails in your inbox.
“Unplanned online shopping is a big culprit of broken budgets. If you find yourself scrolling or adding items to your cart while on your phone, put the phone down and walk away before clicking the ‘buy now’ button,” Anastasio said.
Still kind of feel like shopping? Anastasio recommends waiting 24 hours before going back to your online cart and deciding to go through with a purchase. This added pause time can help shoppers evaluate how much they really want the item compared to the activity of online shopping.
Plan Your Splurges
While many budget-savvy individuals understand the difference between wants and needs and are often careful when spending, Anastasio said it’s unrealistic to completely deprive yourself of fun. What often ends up happening is a budget blows up because one night out or a shopping trip, set aside as a treat, goes overboard. We set out to shop at only one store and come home with several shopping bags or we head out to happy hour and spend all night ordering cocktails and food.
The manner in which we splurge can easily shift if we plan how to spend in advance. “By planning in advance you can enjoy the planning aspect and the anticipation leading up to your purchase or event. By simply being thoughtful you can get more enjoyment out of how you’re spending your money,” Anastasio said.
Fill Your Calendar With Free Activities
While we’re on the topic of not depriving ourselves of fun regardless of the current economic climate, take a moment to review free or low-cost activities in your area. Any that sound like something you would enjoy doing, like a free yoga class at the local library or a movie night in the neighborhood park, add to your calendar. This will keep you from splurging on more expensive alternatives, like expensive day trips or amusement park visits.
Do it now before summer wraps up, too! “If your intention is simply to get out more and spend time with friends or family, there’s no better time than summer to take advantage of free events,” Anastasio said.
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