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July 20, 2022

Rapid spikes in the costs of fuel, groceries, and other goods and services is putting the squeeze on household budgets. Escalating inflation has many people rethinking how they spend and whether they can save for the future. This reality makes performing a mid-year financial checkup more important than ever.

Focus on these five areas to help protect your finances during times of surging prices.

1. Monthly Budget

Review your budget to pinpoint the spending categories most affected by inflation. A commitment to spend less is difficult unless you know which household expenses have increased the most. Based on the results of your review, consider making adjustments that could help lower costs, such as:

  • Getting a roommate
  • Eating out less
  • Using mobile apps, like Upside or GasBuddy, to find the cheapest gas prices near you
  • Requesting a data usage report from your internet and cell phone companies to determine if you’re paying for more service than you need
  • Cutting your entertainment budget in half or eliminating it in favor of free local entertainment
  • Focusing more of your food budget on foods not as affected by inflation, such as canned meats instead of raw beef
  • Using your local grocery store’s mobile app to find sales and coupons you can use in-store or online

2. Savings Accounts

Adequate savings could provide peace of mind if you lose your job or get hit with a financial emergency. While it’s easy to let setting money aside fall to the bottom of your financial to-do list during periods of high inflation, keep it near the top.

  • Ensure your emergency savings fund contains at least three months of living expenses. This might require you to take a second job to build a financial cushion quickly.
  • Review your Flexible Spending Account (FSA) and Health Savings Account (HSA) balances. Depending on your savings goals, you may need to increase or taper contributions. Many FSAs limit the amount you can carry over into the new year, while HSAs have annual contribution limits you may want to reach before year-end.

3. Household Changes

Did you get married, divorced, or add a new member to your household? Forgetting to update accounts and other critical documents could leave your family financially vulnerable. Here are tips to ensure your policies and coverages are current:

  • Update your will and estate plan
  • Add or remove investment and life insurance beneficiaries
  • Expand or reduce workplace or self-employed healthcare coverage
  • Use the IRS Tax Withholding Estimator to determine if you need to change the amount of your take-home pay

4. Insurance Coverage

Aim to lower your annual insurance premiums without sacrificing coverage. Here’s how:

  • Record any changes to your household. Did someone move in or move out? Should they be covered under your policy? Update policies to include only people who should be protected under the plan.
  • Did you recently join a membership organization or pay off an auto loan? You might be eligible for a car insurance discount. Contact your provider to explore ways to reduce premiums. Use the information they provide as a baseline for shopping for lower-cost insurance coverage.

5. Credit

Maintaining good credit is essential regardless of the state of the economy. A healthy credit score allows you to take advantage of low-interest-rate borrowing. Plus, a good score could give you access to products and services without paying hefty deposits.

  • Request free copies of your credit history reports from AnnualCreditReport.com and review them for errors. False information can tank credit scores. Follow each bureau’s dispute policies to remove inaccurate information from your file.
  • HawaiiUSA members with Digital Banking get free, unlimited access to their credit score with My Credit Score. It also includes free credit monitoring and simulations.

Inflation doesn’t have to wreck your financial plans. If you monitor your finances, it’s possible to reduce the pressure of higher prices while staying on track toward achieving your money goals.

Schedule an appointment with us for expert financial guidance.