Money / Financial Planning
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Inflation has hit Americans where it hurts most: our wallets. Though inflation looks like it’s cooling down, it’s still untenable for families who are barely getting by — and that’s a lot of families. According to a recent report by LendingClub, 61% of Americans were living paycheck to paycheck in April 2022 — up from 52% in April 2021.
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Dealing with inflation while living paycheck to paycheck isn’t easy, to say the least, and one just scraping by has to wonder: How do I meet my needs during inflation when I was already struggling before?
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GOBankingRates consulted finance experts for their best tips on how to deal with inflation when you’re living paycheck to paycheck.
Make a Spending Plan You Can Follow
“Take into account a spending plan you can follow,” said Levon Galstyan, a CPA at Oak View Law Group.
“For instance, the 50-30-20 budget designates 50% of your take-home pay for necessities like rent, mortgage and food. Twenty percent goes toward paying off debt and investing, while thirty percent is allocated to desires like going out to dinner. It gives you a built-in cushion so that, in the event of an emergency, you may utilize your savings to pay for it. When making your budget, you should begin by outlining your profits before subtracting your costs.”
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Deal With ‘Icebergs First, Deck Chairs Second’
“Most people focus on the small expenses in their lives in hopes that they will move the needle,” said Brent Weiss, CFP, ChFC, co-founder and chief evangelist at Facet Wealth.
“While small expenses are important to track as they can add up, the reality is that the larger expenses are the ones that can have the greatest impact and improve our quality of life or sink our finances. Start with the big three expenses (housing and utilities, transportation and food) and look for ways to save money. Can you lower your utility bills? Can you cut back on driving or carpool? Can you make food at home and dine out less? Examine the bigger ticket items first and then look at your daily habits to really lower those monthly expenses.”
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