Laurence Hale, AAMS®, CRPS®
Principal/Managing Partner, Investment Advisor & Chief Investment Officer
The annual inflation rate for the United States is 7.5% for the 12 months ending January 2022 — the highest since February 1982. That rising inflation is causing many of us to feel the pinch in our pocketbooks and wallets. While there’s not much we can do to change inflation, there are ways to counteract its effects on your finances. Here are seven steps for doing a “spring cleaning” of your finances to make your spending and saving as efficient as possible.
1. Clean Up Your Spending
Whether you call it a budget or a spending plan, you only need to look in the rearview mirror over the past few months and write down your repeating bills and expenses. When you inventory those expenses, assign a priority number from one to three, with one being expenses you must meet to avoid being evicted from your home and three being rather nice to have, but you could live without. Clear out or reduce drastically your level three expenses. For example, that $70 cable bill is a great candidate for your first cut. Try less expensive streaming services.
2. Clear the Decks and Put Your Savings on Autopilot
That 50 bucks a month you recouped by disconnecting your cable service can now be redirected automatically to your emergency fund.1 If you don’t have an emergency fund to cover at least six months' expenses, you could literally be one or two paychecks away from disaster.
3. Review Your Tax Withholding
If you just received big tax refund and were thrilled, rethink your strategy. What you have actually done is given the U.S. Government a 12-month interest-free loan. Adjust your withholding to get more money in your paycheck instead of overpaying taxes and slide that extra money into savings or another investment plan.
4. Check Into Your Renter or Home-Owner Insurance
Your spring cleaning should include a complete insurance check-up. Go to your insurance files and this time really read the fine print. Is your coverage adequate to replace your valuable belongings at their current replacement costs if disaster strikes? If you own your home, you probably know that repair and construction costs have risen as well. Make sure you're covered. Also, it wouldn’t hurt to check and possibly upgrade your life insurance, especially if your family has grown or your income has gone up.
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5. Plug Into Technology
Let the free and secure technology of your online banking platform keep you on the straight and narrow. Most banking sites have the settings you need to do what you wouldn’t do for yourself. Want to receive a warning when your account balance gets too low or your credit card spending is over a set amount? Your bank can do that via email or text message.
6. Get Your Paper Files in Order
Record keeping is an important part of maintaining healthy finances. For the financial papers you must keep, devise an orderly filing system.2 If you’re after a more simplistic method, head to your office supply store and buy an expandable folder with month separator tabs. Stash the papers you usually throw away each month in the appropriate month of the folder. When January 2023 rolls around, throw out the papers for January 2022 to make room for the current month.
7. Check Your Investments and Rebalance as Necessary
Similar to reviewing and adjusting your budget, it’s extremely important to review and adjust your retirement plan and other investments as well. If the rising costs caused by inflation mean you have a fair amount less available to invest, talk with a financial advisor – we can strategize ways to help you make up the shortfall. There’s also the possibility that the recent market volatility has caused your portfolio to be out of balance and no longer in line with your long-term financial strategy. Making the necessary changes to bring it back into balance can keep you from losing too much ground toward achieving your goals.
Having a solid financial strategy is always critical to living well and reaching your goals, but in times of financial volatility it’s even more important. There’s a lot to consider, and in the current environment your financial strategy can require a close eye on the markets and a quick response to adjust accordingly.
Partnering with a trusted financial advisor can go a long way toward ensuring your finances are in the best shape possible and that your strategy remains sound. We can help you to build a strategy that will allow you to Plan Well, Invest Well and Live Well. Learn more and contact us at (860) 928-2341 or email@example.com to get started.
Presented by by Principal/Managing Partner Laurence Hale AAMS, CRPS®. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your representative. Weiss, Hale & Zahansky Strategic Wealth Advisors does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice. 697 Pomfret Street, Pomfret Center, CT 06259, 860-928-2341. http://www.whzwealth.com.