What recession? These 8 budget strategies will relieve your wallet of economic pressures
Sometimes it seems like there’s no end in sight when it comes to the rising cost of living and rising inflation percentages. Rather than worrying about dwindling savings and increased credit card usage, savvy consumers can implement planning and budgeting strategies to relieve their wallets of current economic pressures.
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Take advantage of these strategies now and enjoy some financial peace of mind.
First, make sure you have a budget
One of the most basic tips for those struggling during times of financial stress is to budget. But do you really have a budget? Tanya Peterson, consumer credit expert for Freedom Financial Network, said not everyone does.
Before making any money moves, your first should be to create a budget. While budgets should be based on both short-term and long-term goals, Peterson said if you’re putting one in place right now, it may be a good idea to focus on the short term. Figure out where your or your family’s vulnerabilities lie, such as prioritizing the preventative maintenance needs of an older car.
Once you have a budget, review it frequently, especially if it’s short-term oriented. Peterson said that could mean comparing budgeted amounts to actual spending weekly or bi-weekly.
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Can you adjust discretionary spending downwards?
That’s the question Emily Irwin – managing director, advisory and planning, at Wells Fargo’s Wealth & Investment Management – wants consumers to ask themselves when re-examining their budgets.
Irwin uses the example of using this as an opportunity to learn how to negotiate with discretionary providers. Think cell phone providers, cable and streaming services, gyms and more. If these companies offer negotiable promotions to new customers, contact them and learn more.
Try the 80/20 budgeting approach
Lauren Anastasio, director of financial advice at Stash, knows that budgeting can quickly become overwhelming and complex. If you need help staying on track, Anastasio recommends trying the 80/20 approach. This suggests saving 20% of your income and living off the rest.
Reassess debt and fixed expenses
Are you looking for a new home? Irwin said now might be a good time to start looking because rents are more likely to rise with inflation. Prospective owners may have the option of locking in a relatively low 30-year interest rate. If you’re not ready to look for a new home or intend to stay put, Irwin recommends evaluating whether refinancing makes sense.
Evaluate large purchases
Is now “really” the time to buy something very expensive? Do you really need to replace your car or your fridge if both are currently working fine? Take a moment to think carefully about whether or not you need to make a big purchase.
If you decide it’s time, Irwin recommends investing in quality products that are likely to require less maintenance or have lower ongoing expenses and last longer.
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“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 want to shop? Anastasio recommends waiting 24 hours before returning to your online shopping cart and deciding to make a purchase. This extra pause time can help shoppers gauge how much they really want the item versus the online shopping activity.
Plan your splurges
While many budget-conscious people understand the difference between wants and needs and are often careful when spending, Anastasio said it’s not realistic to deprive yourself of pleasure completely. What often ends up happening is that a budget explodes because a night out or shopping spree, booked as a treat, goes too far. We decided to shop at one store and go home with several bags of groceries or head to happy hour and spend the night ordering cocktails and food.
The way we splurge can easily change if we plan how to spend in advance. “By planning ahead, you can enjoy the planning and anticipation aspect leading up to your purchase or event. By just being thoughtful, you can enjoy more of how you spend your money,” Anastasio said. .
Fill your calendar with free activities
While we’re talking about not depriving ourselves of fun regardless of the current economic climate, take a moment to review the free or low-cost activities in your area. Add anything that sounds like something you’d like to do to your calendar, like a free yoga class at the local library or a movie night at the neighborhood park. This will save you from splurging on more expensive alternatives, like expensive day trips or amusement park visits.
Do it now before the summer ends too! “If your intention is just to get out more and hang out with friends or family, there’s no better time than summer to take advantage of the free events,” Anastasio said.
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