Budgeting for a big family means stretching resources and making expenditures do double duty (or more). Photo credit: ©istockphoto.com/eskaylim.
SALT LAKE CITY — As inflation hit a 40-year-high in May, a Utah financial planner offered advice on how to budget to keep up with rising costs.
DMBA Certified Financial Planner Shane Stewart told KSL NewsRadio that now is the time for people to begin budgeting.
“This is a very crucial time to put together some sort of plan for your spending before things get worse.”
Stewart said the best thing you can do doesn’t necessarily involve cutting every expense but, just knowing what your expenses are.
“Many people have a very general idea of what they’re spending, but in some categories, they really don’t know,” he said.
The first step is to identify what you’re spending and where.
“What’s really prudent — before you even start putting a spending plan together — to look back and find out what you really have been spending, really pinpoint it,” Stewart said.
Stewart said having a plan can help limit how much you spend on variable expenses like eating out, home improvement, or hobbies.
“Your mortgage or your rent could be regular and consistent. But dining out, or going to a home improvement store, those are variable; not consistent and not predictable,” said Stewart.
Variable expenses can really get away from us if we don’t know how much we are really spending on them each month, according to Stewart.
Stewart said if you struggle with variable expenses, set aside the cash you can afford to spend on it for the month and put it in an envelope.
“[Take that hundred dollars, put it in an envelope, and that’s what you use for the month. And it seems to help us retrain our brains to get within a pattern of spending, especially in times where money’s tight,” said Stewart.
But, Stewart said, don’t avoid setting money aside.
“Trim back as much as you can, but I recommend not trimming back on something like a 401K, especially if you have a matching amount coming in. And not trimming back on — at least a few dollars — into emergency savings,” said Stewart.