One of the main refrains that I am hearing from my clients right now is, “Sheesh…everything is so expensive!”
Post Covid supply chain issues, coupled with government spending (PPP loans, Covid Stimulus checks) meant that there was more money to pay for goods that were hard to get.
Hello inflation!
And a little over a year ago, mortgage interest rates were 3% and now we’re pushing 8%! Car loans and credit cards have all seen spikes in interest rates.
Meaning–that in a very short period of time, homes, cars, credit, groceries and goods have all become much more expensive.
The Wall Street Journal just published an article titled, “Higher Interest Rates, Not Just for Longer, but Maybe Forever,” which means that we need to be able to anticipate what could happen over the next couple of years to begin preparing well now.
The main issue that economists are predicting for the next year or two is that it will be harder and harder to get cash. Buying a new home, getting a car loan or putting something on credit will cost you a lot more than it did a couple years ago.This means we need to start building in Margin into our budgets now to prepare for the future.
So what can we focus on now to make prepare for leaner times:
- Prioritize your spending.
If you routinely spend more than your income, start changing your behavior to live within your means so that you can start saving. - Review your monthly budget.
Are there items in your budget that you could remove for a few months while you build your emergency fund? - Start saving for big expenses.
If you are going to need a car in the near future, start setting aside money for it now. - Look for additional opportunities to make money.
Right now is the easiest time in human history to make additional income if you need it. Whether you opt for something like dog sitting, driving for Lyft/Uber, selling services on Upwork or Fivrr–there are limitless opportunities for hard working people to drive additional revenue. - Pad that Emergency Fund
Let’s start focusing on short term sprints that bring down costs, while driving up our income. With that extra money, we’re going to set aside more cash. If you have cash on hand, you won’t have to pay crazy interest rates if an emergency pops up.
During times like this, it is comforting to me that people of every generation had to go through hard times, and these experiences show them how resourceful they can actually be! Think about what our great grandparents went through during the Depression.
Yes, we can do hard things.
I am just recommending that you make things a bit harder on yourself voluntarily now, so that you will have more resources if inflation and interest rates continue to rise.
To your success!
Crystal
