This column was released in syndication on April 20. 2022.
My mother told me when I was a child that the way people face a challenge says a great deal about them.
Every consumer is being challenged by inflation right now, and the way they respond, indeed, is speaking volumes.
There’s no shortage of complaining and grumbling, of course, but a bevy of surveys also show that people are changing travel plans, postponing big-ticket purchases and altering some shopping habits.
With inflation as high as it has been in over 40 years, this is a challenge on a different scale than many consumers have ever faced. Prices rising this fast make it hard for standard savings fodder like “skip the coffee shop during the commute” to feel effective (although it is worth noting that the same-old java habit has become more costly as coffee has been caught up in higher-pricing trends).
Personally – encouraged by my mother – I always tried to face challenges head-on; it can be fulfilling and satisfying when it works, and fun in the process.
Thus, with money not going the same distance it went just a few months ago, it’s a good time to take a financial challenge in order to help make ends meet.
This week and next, I’ll lay out some of my favorite challenges that every consumer could stand to do now and again, as a kind of financial cleansing and rebalancing. Given how inflation has made people feel like they are off their financial game, personalizing these contests can help get winners back on track.
The great part of all these efforts and games is that you can set your own rules, dial in your own intensity level and do it your own way. With that in mind, give one or more of these:
No-Spend Challenge: A popular exercise for anyone tackling debt issues or living paycheck-to-paycheck, this pays off even when there are no financial problems.
Set a length of time where you strictly limit your spending in most areas. You’re still paying the bills, while looking to uncover other areas where you’re loose with money, where you are caught up in materialism, or where you have unconsciously turned “wants” into “musts.”
Use this challenge to change behaviors that encourage frivolous spending. If you typically go into a store and buy a candy bar or a drink while filling your tank with gas, for example, simply pay at the pump. If you are always clicking through on promotional emails from stores, unsubscribe or un-link your credit cards from the online store’s site.
Make it harder to spend and you will spend less.
To make things more interesting, choose a cause that the extra savings gets put towards. You can target debt reduction or a fuller emergency fund, fully funding annual IRA contributions, a travel account or a “splurge fund,” but seeing the money add up drives motivation to keep things tight once the challenge time has ended.
Price-It-Again Challenge: All consumers have ongoing expenses on things like insurance or cell phones, Internet service and more where plans – and personal usage – often are changing.
If you haven’t re-priced insurance coverage or these other costs in two years, see if you can do better. Don’t be scared off by stories talking about how inflation is affecting these items; yes, a recent Bankrate.com study showed that insurance costs are up right now, but if your plan is old enough, there is still fat to be cut.
Just because you got a good deal when you signed up doesn’t mean it’s still a bargain today. Price things again and see if there are surprise savings available for you.
Use-It-Up Challenge: Also called a “pantry challenge,” this is about eating/using your inventory, the things you have purchased that are in your pantry, freezer, and on your shelves.
It doesn’t have to be a zero-spending event; allow a budget for fresh milk, fruit and vegetables, for example, and to buy supplies that allow you to make the most of use of those items on your shelves, but use up what you’ve got. You’ve sunk real money into those items; you only get that back by using them.
Plan meals based on what you’ve got, but also plan your time to use items that have gone unused. Read the books you’ve purchased but haven’t picked up, use the bath bombs that have been on the shelves for two years. Don’t buy more next holiday season if you haven’t used what you’ve got.
Iced credit-card challenge: This is an old-school fun one that may require some extra work to win at, but it’s exactly what it sounds like. Drop your primary credit card (or maybe all but the one you use for emergencies) in water and put it in your freezer.
The card will not be damaged – provided you don’t use a microwave to defrost it – but you can’t just go out and use it willy-nilly. You will want to make sure the card can’t be accessed via your computer or phone – put the big chill on all access to the card – but the idea is that the more you slow spending, the more you must really want or need whatever you thaw out the card to buy.
Rainy-day/sunny-day challenge: My grandfather introduced this idea to me after my grandparents moved to Miami Beach in the 1970s. He loved family visits and so he saved money for the rainy and sunny days of any visit by tying his savings to the weather.
Every Sunday – just one day per week — he’d 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 bucks; it was that simple.
He saved more in the summer than the winter, of course, but he built up a fund that he then used to make sure that if the grandchildren were visiting, they were having a blast no matter the weather.
Copyright, 2022, J Features