If you have found inflation is causing your money to be spread a bit thinner than you would like, you are not the only one. Many people are finding their finances are in worse condition than before prices rose so high. If you are feeling concerned about the state of your money, there are steps you can take to adjust your money a bit.
Deal with Student Loan Debt
If you still owe money from school, you could consider getting it refinanced. As interest rates rise, it becomes more expensive to borrow money, so this is a great time to make sure you are staying on top of what you owe. If you want more information on how to refinance student loans in 2022, you can review a guide on what the process might look like.
Learn Where You Currently Are
It’s a good idea to figure out where you currently stand with your money. While you may have heard all sorts of numbers thrown out there while talking about inflation, it’s a good idea to learn your own inflation rate. This is a bit more specific than the other numbers you may have heard about.
Create a Budget
Once you have understood where you stand with spending, take some time to plan out your budget. Doing this will create a strong foundation for your money. You don’t have to follow it to the exact dollar, but it can still give you an idea of how to keep costs down and where your funds are coming in and where they are going out. This allows you to stretch your money even more. You will need to carefully look through each portion of the budget to determine what you can do better. You may look over debt repayment to see if you can save money on interest. One option is to do a balance transfer if you have a balance on a high-interest credit card. You can transfer it to a card that has a lower balance. Of course, you would still want to pay the amount off because the interest would still add up. Most of the time, you need to have good credit to make this work.
Take Control of Credit Cards
If you enjoy using credit cards, you may find it is harder to stick to your budget and control your money. It is easy to lose sight of your spending goals when you are just swiping your card mindlessly. When you don’t pay attention to the price of each item you are buying, you might find yourself stuck with a bill you are struggling to pay. Because you aren’t seeing the cash leave your hands, it can be easier to spend more than you intended when you are using a credit card. Still, it is possible to use credit cards and still maintain control over your budget. If you have cards with rewards, it can actually be beneficial to use them instead of other options. They can help you save money. The trick is to create a monthly spending limit for your cards. You can also have them send notifications if you are getting close to your limit.
Reduce Unnecessary Expenses and Fees
Nearly every financial institution charges a fee for their products, but the products that you may be charged on can vary depending on the institution. However, you can expect to pay fees on debit cards, credit cards, bank accounts, and other products. Some of these might not be avoidable, but it is possible to remove some of the fees. One way to avoid high credit card fees is to look over the user agreement before you choose to sign anything. Determine how much you are spending when it comes time to pay the bill, and avoid late fees by paying on time. If you can’t afford to pay your credit card bill, you can’t afford a credit card. You might also avoid cards that have annual fees, unless you are paying for perks you will actually use, such as travel rewards or cash back. Pay attention to checking account minimums as well. If you do not have the minimum amount in the account, you may face fees. This might be applicable if you need everything from each paycheck in order to get by. Still, there are lots of checking accounts that don’t charge fees, and there are usually some that will give you interest on the balance you do have.
Keep Track of Investments
As interest rates rise, investors might be tempted to play around with their portfolio during this volatile market. However, it is usually best to continue sticking to your long-term plan and not let changing market conditions affect your savings. It is usually best to continue to invest in stocks for your retirement accounts. You do have the option of borrowing against certain retirement accounts, but if you do, you won’t have as much money in the account to grow compounded interest. Plus, if you take out a loan now, there are some risks. If you lose your job, you may need to repay the loan to prevent it from being considered an early withdrawal that you then need to pay penalties on.
Don’t Neglect Savings
You might wonder if this is a good time to put your savings on hold, so you have more money for living expenses. However, if you do so, you could be neglecting to take free money. Interest rates have risen, which means money in your savings accounts and investments will earn you more. As banks start to raise their rates to keep up, it’s a good idea to stay in the habit of putting something aside on a regular basis. If you have already been making savings a regular habit, you may want to reevaluate your spending habits. If you don’t have enough to spend every month, consider changing up the way you spend. You could also look for additional sources of income to help you get there.
Listen to episode 689 of the Money Girl podcast to learn more about inflation.