For many of us, the holidays are a time for spreading good cheer. Unfortunately, that can lead to impulsive spending, excessive gift giving, and living beyond one’s means. Even during years of low inflation, these behaviors can cripple our ability to pay bills on time. But during a year of double-digit inflation such as we have seen in 2022, and the recession we expect to see in 2023, these behaviors can lead to financial ruin.
Fortunately, we can take steps to lessen the impact of inflation today and the challenges associated with a recession tomorrow. The first step is probably not one you would guess – pay yourself first. It is the sage advice our grandparents lived by and time-tested advice that may keep food on the table, prevent the repossession of the car, avoid eviction or foreclosure, or make that visit to the doctor for an ill child possible.
When you are paid $100 today, save $5.00 for tomorrow. When you are paid $500 today, save $25.00 for tomorrow. When your child earns $10.00 babysitting, insist they save $.50 cents for tomorrow. Do this kind of saving even before you pay your bills, buy your groceries, or clothe your children. This kind of saving happens by habit and not because you have money left over. Fiercely protect your saving by making better choices about how you spend your money.
Examples of other ways to help you find the money to pay yourself first might start with registering for the grocery store’s loyalty program. If after you check out, look at your receipt. If the receipt shows you just saved $3.00, pay yourself first. When you get home, place the $3.00 in your special reserve. If the grocery store receipt also includes a coupon for $.05 off per gallon of gas at a local station, go to the gas station, use the coupon to buy the gas, and pay yourself first. When you get home, place the amount you saved in your special reserve.
Can you think of other ways you can pay yourself first to build your savings? Watch for the next tip in our inflation busting countdown to the new year.