My mom told me when I was a kid that how people take on a challenge says a lot about them.
Every consumer faces inflation right now, and how they react, indeed, speaks volumes.
There’s no shortage of complaints and grumblings, of course, but a slew of surveys also show people changing their travel plans, postponing big-ticket purchases and changing some shopping habits.
With inflation as high as it has been for over 40 years, this is a challenge of a different magnitude than many consumers have faced. Prices are rising so fast that it’s hard for standard savings foods like “skipping coffee on the commute” to feel effective (although it’s worth noting that the same old java habit has become costlier as coffee has been overtaken by higher prices). price trends).
Personally – encouraged by my mother – I have always tried to face challenges head on; it can be fulfilling and satisfying when it works, and fun in the process.
So, with money not having traveled the same distance as it did just a few months ago, now is a good time to take on a financial challenge to help make ends meet.
This week and next, I’ll be featuring some of my favorite challenges that every consumer might face from time to time, as a sort of financial cleanup and rebalancing. Since inflation has made people feel like they’re out of their financial game, personalizing these contests can help get winners back on track.
The great part about all these efforts and games is that you can set your own rules, dial in your own level of intensity, and do it your way. With that in mind, give one or more:
Challenge without spending: A popular exercise for anyone tackling debt issues or living paycheck to paycheck, it pays off even in the absence of financial troubles.
Set a time frame during which you strictly limit your spending in most areas. You continue to pay the bills, while seeking to discover other areas where you are losing money, where you are caught up in materialism, or where you have unconsciously turned “wants” into “obligations”.
Use this challenge to change behaviors that encourage frivolous spending. If you typically go to a store and buy a candy bar or drink while refueling, for example, just pay at the pump. If you are still clicking on promotional emails from stores, unsubscribe or unlink your credit cards from the online store site.
Make it harder to spend and you’ll spend less.
To make things more interesting, choose a cause to which the extra savings are dedicated. You can target debt reduction or a more comprehensive emergency fund, fully funding annual IRA contributions, a travel account, or a “splurge fund,” but seeing the money pile up motivates you to keep things tight once challenge time is over.
Price-It-Again Challenge: All consumers have recurring expenses on things like insurance or cell phones, internet service and more where plans – and personal usage – change often.
If you haven’t changed the price of insurance coverage or these other costs in two years, see if you can do better. Don’t be scared off by stories about how inflation affects these items; yes, a recent study by Bankrate.com showed that insurance costs are on the rise right now, but if your plan is quite old, there’s still some fat to cut.
Just because you got a good deal when you signed up doesn’t mean it’s still a good deal today. Reprice things and see if there are any surprise savings available to you.
Use-It-Up Challenge: Also called the “Pantry Challenge”, it’s about eating/using your inventory, the things you’ve bought that are in your pantry, freezer, and on your shelves.
It doesn’t have to be a no-cost event; budget for fresh milk, fruits and vegetables, for example, and for buying supplies that allow you to make the most of those items on your shelves, but use what you have. You have invested real money in these items; you only get that back by using them.
Plan meals around what you have, but also plan your time to use up items that haven’t been used. Read books you bought but didn’t pick up, use bath bombs that have been on the shelves for two years. Don’t buy more during the upcoming holiday season if you haven’t used what you have.
Frozen credit card challenge: It’s a fun, old-school game that may take some extra work to win, but that’s exactly what it sounds like. Dip your main credit card (or maybe all but the one you use for emergencies) in water and put it in your freezer.
The card won’t be damaged – provided you don’t use a microwave to thaw it – but you can’t just go out and use it willy-nilly. You’ll want to make sure the card isn’t accessible through your computer or phone – put the big chill on any access to the card – but the idea is that the slower you spend the more you must really want or need of anything you unfreeze the card to buy.
Rainy day/sunny day challenge: My grandfather introduced me to this idea after my grandparents moved to Miami Beach in the 1970s. He loved family visits, so he saved money for the rainy and sunny days of any visit by tying savings to weather conditions.
Every Sunday – just one day a week – he set aside the same number of dollars as the high temperature. If “Weaver the Weatherman” said the daily high was 80 degrees, Grandpa set aside $80; it was as simple as that.
He saved more in the summer than in the winter, of course, but he built up a fund which he then used to ensure that if the grandkids were visiting, they would have a blast no matter the weather.