Recovering from Inflation: Tips for Improving Your Family’s Financial Fitness

The past two years have been financially challenging for many households as inflation reached its highest levels in decades. While the good news is that inflation is starting to cool down in 2024, consumer prices are still significantly higher than they were just a few years ago, putting pressure on family budgets. As we enter the new year, it’s a great time to focus on improving your family’s financial fitness. Let’s explore some tips to help you achieve that goal.

The Essential Role of Budgeting

To achieve financial fitness, budgeting is crucial. Even if you’ve struggled to stick to a budget in the past, we have some tips that can increase your chances of long-term success.

1. Schedule Monthly Budget Reviews

Whether you’re single or part of a couple, make it a habit to schedule a mandatory monthly budget review on the same day and time each month. Keep the meeting limited to one hour and free from interruptions. By establishing this consistent habit, you can ensure a thorough review is conducted each time.

2. Make Monthly Financial Improvements

Start each budget review session by taking one action to improve your finances for that month. Here are some examples:

• Move high balances from a checking account or traditional savings account to a high-yield savings account with better interest rates.
• Identify and cancel any unused or unnecessary subscriptions.
• Distinguish between needs and wants and make honest assessments.
• Pay off a credit card bill in full or make a significant payment to reduce debt.
• Thoroughly check your bills for accuracy and address any issues with customer service.
• Sign up for e-statements, paperless billing, and push notifications to stay organized.
• Set up automatic bill payments to avoid missing due dates.
• Regularly check your credit report for errors or fraudulent activities.

Strategies for Success

To increase your chances of success, focus on manageable timeframes rather than trying to plan for every possibility over the long term. Take things 30 days at a time and concentrate on what you can control in the foreseeable future. For instance, in February, set goals for March and April to budget for upcoming spring travel plans.

1. Aim for Consistency, Not Perfection

When it comes to budgeting, understand that hitting the bullseye every time is not necessary. Instead, aim for consistent progress. Even if you don’t meet your budget goals precisely, reviewing it carefully every month and making improvements is still considered progress. Remember that consistently achieving a passing grade (C+) is better than striving for unrealistic perfection (A+) month after month, which often leads to feelings of overwhelm and giving up.

2. Learn from Missteps

Don’t be too hard on yourself for budgetary missteps. Address any underperformance during your monthly meeting and strategize on how to adjust your behavior for the following month. For instance, if you exceeded your dining-out budget, incorporate weekly meal prep into your household planning for the next month. Reflecting on unforeseen expenses for about five minutes during the hourlong meeting can be helpful, but don’t dwell on it excessively.

3. Allow Time for Progress

Establishing a successful budget may take time, so be patient with yourself. It’s unrealistic to expect immediate results, even if you have budgeted in the past. Give yourself approximately three months to practice before evaluating your success. Since winter restricts opportunities for social spending, it’s an excellent time to embark on this journey and gain momentum. Additionally, consider doing some financial spring cleaning as the winter comes to an end.

Begin Your Journey to Financial Fitness Today

There’s never a wrong time to start budgeting, regardless of how daunting it may seem. According to Bankrate, about 72% of Americans don’t feel financially secure. Follow these simple tactics to gain confidence in managing your finances and remember the timeless advice: a budget enables you to tell your money where to go instead of wondering where it went!

Andreea Westerhold is AVP real estate loan advisor for Arvest in Springfield.