The past two years have squeezed many household budgets as inflation rose to its highest levels in decades. As we come into 2024, inflation is beginning to cool, which is very good news. However, consumer prices are still much higher than just a few years ago, continuing to put pressure on those budgets. At the beginning of every new year, many people resolve to improve their physical fitness, so let’s take a look at some tips on how to improve your family’s financial fitness.
The path to financial fitness begins and ends with budgeting. You may have tried and been unable to stick to a budget in the past, but today we’ll share some tips to improve your chances of long-term success.
It’s a date!
Whether single or part of a couple, schedule a mandatory monthly budget review for the same day and time each month. Limit the meeting to one hour without interruptions. Doing this should help create a consistent habit and ensure a proper review is done each time.
Start each session by doing one thing to improve your finances for that month. Examples include:
- If you have a high balance in a checking account or traditional savings account, move it into a high-yield savings account to take advantage of higher interest rates;
- Identify and cancel unused or unneeded subscriptions;
- Be honest with yourself about the difference between needs and wants;
- Pay off a credit card bill in full or make a significant payment to reduce that debt;
- Check your bills to ensure accuracy and call customer service during this time if you see an issue;
- Be sure to sign up for e-statements, paperless billing and push notifications;
- Set up automatic bill payments;
- Check your credit report for any errors or fraudulent activity.
To bolster your success, don’t try to plan for every eventuality that could happen over your lifetime or even a year. Instead, focus on what you can control in the foreseeable future and take things 30 days at a time. For example, in February, you might set goals for March and April to budget for spring travel plans.
Almost counts in horseshoes, hand grenades … and budgeting
Once you set your budget for each month, embrace the concept of horseshoes and hand grenades: you don’t have to hit the bullseye every time. Getting close to your budget and remembering to review it carefully every month still counts as making progress. Aiming for consistent C+ work — almost hitting your goals — is still a passing grade and is better than hoping for unsustainable A+ work month after month. Having unrealistic goals will make you feel overwhelmed and can cause you to give up.
Speaking of giving up …
If you beat yourself up over every budget misstep, you’ll set yourself up for failure. Don’t dwell on underperformance but do address it in your monthly meeting to see if you can shift behavior for the month ahead. For example, if you ate out more than you budgeted for, make weekly meal prep part of your household planning for the next month. Knowing where you had unplanned expenses will be helpful but limit that reflection to about five minutes of your hourlong meeting.
Check your work but wait a while
Even if you’ve budgeted in the past and are getting back into the habit for the new year, it’s unreasonable to expect success right away. Give yourself about three months of practice before evaluating your success. Winter is a great time to start this journey since the cold weather limits opportunities for going out and spending money socializing. After spending the winter indoors, you might also want to do some spring cleaning with your finances.
There’s never a bad time to start budgeting, even if it seems daunting. According to Bankrate, about 72% of Americans don’t feel financially secure. Deploying these simple tactics can help you feel more confident in your finances. And remember the age-old advice — following a budget lets you tell your money where to go instead of you just wondering where it went!
Andreea Westerhold is AVP real estate loan advisor for Arvest in Springfield.