It’s no secret that the economy is in bad shape. Countries around the globe are struggling with inflation and have few solutions on hand. Executives weigh in on the conversation, and confidence in the economy is overwhelmingly low.
Why the Fear
Despite continued reporting of a strong job market, many metrics show a slowdown in 2022. Part of the problem is the Federal Reserve’s aggressive approach after inflation took hold. Today inflation sits at about 8.6 percent, the highest it’s been since the 1980s. Meanwhile, the economy had close to zero percent inflation during the pandemic. In a reactionary response, the Fed is cranking up interest rates and has committed to continue this pattern until inflation goes down.
The high-interest rates, supply chain, and labor shortages have executives worried about future growth. Wall Street economists have been predicting a recession in the next year or two, but depending on what the Fed does, it could happen sooner. Their militant approach could be too little, too late, and send the economy into a tailspin.
These fears were validated in a recent JPMorgan Chase survey of executives. In the report, 99 percent of the executives stated that input costs have significantly increased. Among the top three issues executives are concerned about are labor shortages, supply chain, and higher cost of business — all of which have been talked about repeatedly among economists.
To retain labor, midsize companies are experimenting with several options. The top three incentives are raising wages, flexible work locations, and increased benefits. Unfortunately, 76 percent of these executives plan to recoup these expenses by raising consumer prices. To add insult to injury, they indicated that these price hikes are unlikely to go away quickly.
How to Navigate
Although costs will likely increase in the coming months, a mindful eye can keep expenses at bay. Temptation is a burden we all bear; however, a little forethought and discipline can go a long way in today’s economy. A word to the wise, take a lifestyle change approach to how you spend. It’ll create a more sustainable path forward and still preserve happiness.
Here are some everyday practices you can adopt to be more financially healthy:
The cost of gas is astronomical, over 16.2 percent higher, and unnecessary trips are only costing you more money. This doesn’t mean you must be a hermit, but perhaps more intentional. For starters, plan out errands in conjunction with other daily actives, like going to work, dropping the kids off at summer camp, doctor appointments, etc. Map out your route for the most effective way to make all your stops, making it a point to go out of your way as least as possible.
Going out to restaurants, bars, or other entertainment outside the home is expensive. Just one drink after work can quickly turn into several rounds, dinner, and a giant hole in your wallet. Instead, host a night with friends at your place. Creating a theme like a video game tournament, board game night, or movie night can be fun. Make it a pot-luck-style gathering to prevent buying all the food and refreshments. Everyone can bring their favorite appetizer or dish to pass. This way, the financial burden isn’t only on one person; everyone contributes and has a blast.
Grocery Shop Intentionally
It can be easy to stroll to the grocery store and “wing it.” This can be a dangerous proposition. Remember that grocery stores are pretty sneaky at putting products in your face that appeals to your senses, not your wallet.
The number one way to avoid overbuying is to create a list. Create a simple rule; if it’s not on the list, it doesn’t go in the cart. To make this habit part of a lifestyle change, you can live with, be sure to add a treat for yourself. Traditionally, when people feel deprived, they’re only going to sustain the deprivation for so long until a collapse. This little tip will keep you honest and on the right track.
Consider how much food you toss in a week. Produce is especially vulnerable to waste, but you don’t have to eat unhealthy processed food all the time. Did you know you can preserve avocados much longer if you keep them in cold water? This may sound wild, but it works. If your bananas are getting too brown, pop them in the freezer for a smoothie later. Spinach can wilt quickly. If it does, toss it in the freezer next to those bananas for an even healthier smoothie. The key to this process is getting creative in finding ways to maximize your goods.
Slash High-Interest Debt
The most significant liability in today’s uncertain economy is high-interest credit card debt or variable interest loans. Given the earmarked interest rates by the Fed, minimum payments are likely to rise, making it even more difficult to pay down your principal balance. Make it your top priority to eliminate this debt or significantly reduce it.
Perhaps you’ve made every effort to get out from under your high-interest debt to no avail. Understand that you’re not alone. Advocate Debt Relief can help. Our well-versed analysts can assess your situation and help you consider options you may not know about. You deserve a win, and we’ll help you get one.