How to Fine-Tune Your Budget to Account for Rising Costs
educating-myself | Read Time: 3 minutes
By Vernita Dorsey | Published: May 2022
Inflation and rising interest rates have been top-of-mind for many consumers in recent months, as the cost of everything from groceries to gasoline, and cars to houses, has increased.
A recent WSFS survey found that 44% of Greater Philadelphia and Delaware region respondents are not confident they can keep pace with inflation’s impact on goods and services. And as the Federal Reserve continues to aggressively raise interest rates to combat soaring inflation, many consumers are left feeling a major impact on their wallets.
Here are tips to help fine-tune your budget and stay on track to meet your financial goals.
Start with the Basics
Building an emergency fund (54%) and saving for a large purchase (36%) were among some of the key goals cited by regional respondents in the WSFS survey. These goals can take time to achieve even in periods of little-to-no inflation, so it will require extra vigilance to keep your budget on track.
A good place to start is to take a close look at your monthly statements to see where you can tighten things up a bit. Online banking (64%) and mobile banking (61%) were the top tools cited by regional respondents for managing their money, and can be a great resource when it comes to budgeting.
If you’re not already enrolled in your bank’s online or mobile banking, consider setting up an account and take a close look at your statements from the past few months.
Are there any unused subscription services? How much are you spending on your weekly groceries? How often do you go out to eat? These are just a few of the questions to ask yourself when looking at your budget for cost savings.
With inflation impacting the cost of nearly everything, now is the time to shop around for deals on food and necessities and look to trim any unnecessary costs to ensure your budget doesn’t fall into a deficit.
Set Actionable Goals
As with many things in life, setting actionable and measurable goals when it comes to your finances can help you build a clear road map toward where you want to go.
Increasing retirement savings (47%) was among the top goals cited by regional respondents. While increasing savings can be more difficult during times of inflation, putting a plan in place can still help make these goals more achievable.
If you find yourself with extra savings built up already, consider moving money not needed in the short-term into a money market or similar account that will accrue more interest, and ensure you’re maxing out any matching contributions from your employer for your 401(k) or retirement plans.
If you’re unsure where to start with setting your goals, making an appointment to talk to your banker or a financial advisor can be a great first step in putting an actionable plan in place.
Keep a Close Eye on Borrowing
With interest rates on the rise and impacting everything from credit cards to mortgages, now is the time to reign in your borrowing to ensure you don’t put yourself too far into debt. Paying off debts other than a mortgage (44%) was another goal top-of-mind for regional respondents.
Ensure you’re paying off your credit card balances each month to avoid accruing interest where possible. If you’re unable to pay off your cards each month, start with the account with the highest interest rate, or consider consolidating your debt under a card with a better interest rate or through a personal loan.
If you have federal student loan debt that has qualified for the pause in payments, consider paying down as much of the loan as possible while the interest is still frozen to make a larger dent in the principle before required payments resume.
Saving and budgeting are lifelong skills needed in your financial journey. While increased inflation and interest rates can make it more difficult to achieve your goals, having an actionable plan in place and making regular adjustments to stay on track can help set you on a path toward success.
About the Author – Vernita Dorsey
Vernita Dorsey is Senior Vice President, Director of Community Strategy at WSFS Bank. She has more than 38 years of experience as a community banker and has actively served her community throughout her career.
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