Today’s inflationary economy is putting the spotlight on an all-too-common issue: families often live at the very edge of their financial means. One unexpected expense can be all it takes to tip the household budget scales.
As we have all learned over the past few years, there will always be external factors that impact our wallets. Which means living paycheck-to-paycheck is a difficult spot to be in. Today’s quandary? Historically high prices on goods and services.
To cope with this widespread inflation, people are altering their spending habits. They are making tradeoffs to account for the reality that most day-to-day essentials remain significantly more expensive. In general, people seem to be fine with making those tradeoffs on everyday purchases (bargain brand groceries, cheaper toiletries, secondhand clothing).
What is remarkable is what they are less likely to give up on, at least for now: those special occasion, higher cost “treat yourself” expenses. Plenty of people are still planning big vacations, eating out, and purchasing high dollar luxury items and services. We have a tug-of-war between continuing to spend on what is considered extraordinary and trading down for much of the ordinary. A conscious effort is being made to spend with purpose.
Being purposeful about what you spend your money on is always a good idea. With high prices across the board, it is even more so. If you have not reviewed your expenses in a while, take some time to evaluate where you stand. Look at your costs on housing, utilities, vehicles, subscriptions, groceries, clothing, services, and non-essential items. Where does your money go?
Even more importantly, think about where you want your money to go. Do you have big goals for the future? Are you trying to save for something that is important to you, in the near term or sometime down the road?
Are there tradeoffs you can make that will allow you to steer more money towards the goals that matter to you most? What are the ordinary things you can trade down for, cut back on, or perhaps forgo all together? Can you make room in your cashflow for the extraordinary?
We aim to help our clients live their lives to the fullest while also taking care of their financial business. If you would like us to take a look at your specific situation with fresh eyes, do not hesitate to reach out.