After 15 months of a global pandemic coupled with an economic crash, now inflation is back. The next “Big Bad Wolf” has arrived at our doorstep (see my April 2021 article “Financial Peace and The Three Little Pigs” Financial Peace and The Three Little Pigs (ogdenweberchamber.com)). Almost everything costs more right now. It’s as if we’ve moved to California, with gasoline approaching $4.00 / gallon, housing prices going insane (see Why is Utah’s housing market so ‘insane?’ – Deseret News), and your used car might be more valuable today than when you bought it two years ago ago (See Here’s why car prices have gotten so high, so fast. And why they’ll keep climbing – CNN).
If you are like most people, your income probably has not gone up at the same rate. Which means you have even less money to spend after inflation. If you let the “Fear of Losing Out” overcome your common sense, you might be at risk of ending up with enormous financial stress when the bills come due.
My clients are asking me what they should do in this crazy season. Some are afraid that prices will keep going up (which they may do, for a season, but not forever) and that it will be even harder for them to buy that house, or car, or go on vacation. They want to buy now, even though they do not have the money to do so. I remind them that the math we learned in elementary school still applies. If they are living paycheck to paycheck right now – if they have “more month than money” right now – then it will be even worse in the future if they impulse buy that high-priced house or car with a loan they cannot afford.
Here are some things everyone can consider:
- Check your family budget and tighten it up to account for the higher costs of everything.
- Make sure you can pay for the “four walls”: food, rent/mortgage, utilities, and transportation. You must be able to pay for those to take care of your family.
- Review your planned “big purchases” (house, car, truck, trailer, vacation, etc.) and determine whether you can now afford them without wrecking your future finances.
- If you do not have the money right now, give yourself some grace, and continue putting money aside for when you will be able to afford those big purchases.
- The Pandemic is in our rear-view mirror, the economy is roaring back, these crazy prices will stabilize, and you will be able to buy when the time is right for you.
If you are under financial stress, or have a hard time doing a monthly family budget or need some advice about how to pay off debt or save for retirement, you are not alone. 78 percent of Americans are living paycheck to paycheck and half do not have the cash to pay for a new washing machine. Half of Americans over 55 years old have zero retirement savings. If this sounds like you, contact a financial professional. We are here to help you, especially in these crazy times.
A Helping Hand Financial Coaching is a service-disabled, veteran-owned small business in Weber County, owned and operated by Don Hickman. Don is a Dave Ramsey certified Master Financial Coach. He helps turn financial nightmares into American dreams and financial stress into financial peace. Don has helped hundreds of individuals and couples better understand their relationship with their money, learn to live on less than they make, and to plan and create wealth for their futures.