If you notice that it is harder to pay your bills lately, you are not alone. The prices of goods and services purchased by the average family have risen by more than $709 a month over the past two years, according to Moody’s Analytics. The higher cost of living stresses family budgets, especially since incomes have not kept up. The Census Bureau announced this week that inflation-adjusted wages fell in 2022 for the third year in a row. As prices are rising, your spending power is declining.
As a financial adviser, now is a good time to re-evaluate your budget and change your discretionary spending before you end up in debt or fall deeper into debt.
The Washington Post reported last month that the delinquency rate for credit card payments has risen to the highest rate in over a decade. Over the past few years, consumers’ credit card usage has increased significantly. Since 2019, more than 70 million new credit card accounts have been opened, and total credit card debt has topped $1 trillion for the first time.
If you need ideas on making your dollar stretch further, here are some tips to help you manage your money in these tough economic times.
- Be intentional with your spending and giving. Adjust your budget for your current spending levels for food, utilities, and other necessities. Then, plan giving and discretionary spending to fit within your budget.
- Consider cutting back on retirement savings and investments until you are better financially.
- Look for “extra” sources of cash. If you got a large tax refund this year, you can access that money now by reducing your payroll withholdings.
- Evaluate your car insurance plan and see if you can cut out some coverages or find a less expensive plan; for example, you might have duplicate benefits if you have a medical insurance plan.
- Reduce your cable bill by eliminating one or more premium channels.
- Fast one purchase category for a month, such as specialty coffee beverages, massages, new shoes, clothes, or lunches out. Each month, forgo a different spending category. This system allows you to save money without giving up “luxuries” for an extended time.
- Earn some extra money on Fiverr, Freelance, or Upwork. These freelance job sites provide a way for you to use your talents to earn money when you have a bit of free time.
It is never fun to tighten one’s belt; however, making necessary changes is preferable to running up large credit card balances and feeling stressed due to the inability to meet your obligations.
As you consider these options, ask God for guidance. He promises wisdom to those who ask Him. “If any of you lacks wisdom, let him ask of God, who gives to all liberally and without reproach, and it will be given to him.” James 1:5
My book Honoring God with Your Money offers guidance to help you manage your money according to biblical principles.
Susan's Reflections 