News about inflation and a looming recession has been dominating the headlines, but what does all of this mean for us and our finances? This is our second and final episode on Inflation, Recession and your Finances here on CFO at Home. In this episode Vince talks with Emily Rassam, Senior Financial Planner with Archer Investment Management, about the importance of sticking to the basics of solid money management during times of economic uncertainty; budgeting, knowing your risk tolerance, and more.
Key Takeaways
- History shows that during times of economic change and uncertainty headlines and media stories often seek not to inform but rather to tap into emotions (especially fear) to attract attention.
- The basics of a solid financial foundation remain the same regardless of economic conditions
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- Get organized. If you have a written budget, what adjustments can you make to provide a bit more “padding”?
- If you don’t have a written budget, now is the time to start!
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- Gather data on where all of your money is going monthly
- Create different categories of expenses
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- Fixed monthly expenses (same amount every month)
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- Look at the possibility of re-negotiating internet, subscriptions, etc
- Look at possibly cutting some subscriptions
- Variable monthly expenses
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- Identify where you’re spending money and ask yourself “is this reasonable”?
- Identify what your baseline expenses are what can be cut if you experiences a job loss or reduction in income
- Extras
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- Can you delay or do without?
- Not budgeting your money ahead of time means you run the risk that it will get spent before you know it on things that may not be a priority.
- Budgets need to be adjusted monthly because rarely are two months exactly the same.
Projecting your budget into the future can be motivating; it lets you project when you will hit your goals.
- Income/Employment - What can we do to help manage the stability of our jobs/income?
- Focusing on your long-term financial plan can help you manage through the emotions of uncertainty
- Your financial plan should be built with decades, not days in mind.
- Try a “on-line shopping challenge”
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- Don’t make any on-line purchases for 30 days. Put things that you would ordinarily purchase in your cart, but don’t buy them.
- At the end of the 30 days look at the list and categorize
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- Yes, going to purchase now
- Want to have, but not going to purchase now. Add to a “wish list” for others to purchase for you as gifts for holidays, etc.
- I don’t need it at all (at least right now). Delete or save for later.
- Helps to make purchasing decisions rationally, not emotionally
- If your partner isn’t as “into money” as you are, focus your conversations about finances more towards big picture goals and your plans of how to achieve them
- Investments
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- Times of market volatility can be a good time to assess your risk tolerance
Ways to contact:
Contact the Host - vince@thecfoathome.com
