Realistic Money Goals In An Unrealistic Economy
When things are going awry in our economy, it’s hard to know what are realistic money goals vs. what are unrealistic money goals.
The reality is that we can’t and don’t control gas prices, higher rent bills, or food prices. If we could, all of it would be free and equitable.
So what money goals do you set when prices begin to creep up and your income stays the same?
Increase your savings by 3% each month
If you’re starting out with an emergency fund of $1,000 (just for easy math), try increasing it each month by 3%.
First month: $1,030
Second month: $1,060
Third month: $1,091
Fourth month: $1,123
Fifth month: $1,156
Sixth month: $1,190
I find that even saving the slightest bit of money makes me feel better and like I’m actively taking care of myself.
If you can afford to save more, save more, but if you can’t, at least you’re saving something.
I recommend saving at least one month’s worth of expenses before you begin paying off debt or try to accomplish other money goals. In most cases, $1,000 won’t be enough for an actual emergency and if you fail to secure an appropriate emergency fund, you risk the chance of going back into debt.
Make high interest debt a priority
At the time of this blog article, interest is at a 40 year high, or 8.6%. If you prefer the debt snowball method of paying off debt, I urge you to consider the avalanche method instead.
While you’re getting hammered by higher prices on your every day purchases, you want to alleviate high interest on your debt as fast as possible. It doesn’t make sense to focus on a debt that has an interest rate of 6%, when you’re just accumulating more debt on a debt payment that is attached to an interest rate of 20%.
At the same time, if you need to pause aggressive debt payoff while we collectively whether this inflation storm, that makes sense too. Always have your emergency fund and four walls: housing, transportation, utilities, and food, safe and secure before you start to make debt payoff a priority.
Be realistic about your food budget
According to the Bureau of Labor Statistics, food at home has increased 10.1% and food away from home has increased 11.9%. With increased cost in transportation, and supply chain issues, this is likely going to be a trend over the next several months.
Not to mention, there is some economic speculation that these increases are actually here to stay.
That’s why you just need to expect to pay more down the aisle or at the restaurant. If you want to save more money, pay off more debt, invest, or set aside funds for larger projects, you should probably take and/or cut from any other budget category— because food is expensive.
If you are looking to try to shave down this category here are a few tried and true tips:
Shop at the Dollar Store or Family Dollar
Don’t shop at just one store, you won’t get the best deal that way
Have a meatless meal once a week
Do grocery pick-up, there’s less of a temptation to impulse spend
Shop at discount grocery stores (i.e. Aldi’s)
Stick to a meal plan, you can find free templates on Pinterest or make your own
Get frozen vegetables, this reduces food waste
Use Ibotta to get cash back
It’s hard out here for money nerds and the American working class. It’s even more challenging to make realistic money goals that you will accomplish and avoid making money goals that simply can’t happen right now.
Hopefully focusing on what you can do and not what you can’t do will help you and your family through this bear market.