Worst-in-a-generation price hikes spiked the costs of basically everything in the Seattle area.
Inflation, the rise in prices of the stuff people buy, hit 10.1% in June. Though it is expected to have eased in July as gas prices mellowed, inflation rates will likely remain above the 2% norm for months to come.
All that is “anxiety provoking to say the least,” said Tony Leahy, executive director of Consumer Education and Training Services, or CENTS, a Seattle-based nonprofit committed to helping people improve their financial health. But, Leahy said, “knowledge is power” when it comes to financial stress. Here are some of his tips on dealing with it:
- First thing first, don’t panic. You can get a hold of your finances, even if you haven’t before. “When people are overwhelmed, they tend to make rushed decisions,” Leahy said, like trading in a reliable car for a cheaper one that will end up costing more when it breaks down.
- If you’re in a financial emergency, there is help. Call 211 if you might need public benefits. Attend a debt clinic, like those run by the Northwest Justice Project or the King County Bar Association, if debt collectors are circling. “Let go of the shame,” Leahy said, “and let go of the guilt.”
- Make a budget. If you already have one, examine it. Compare your expenses to your income. Consider building an emergency budget. If you lost your job tomorrow, what would you have to spend on? How much would you really need? It’s a good exercise, and good preparation should a money emergency strike. (Centsprogram.org has a budget form available online in its resources section.)
- First, look at your expenses. Check for autopayments you’ve forgotten about, and recurrent, cuttable expenses. Maybe you’re dining out more often than you think you are. Cut back where you can.
- Then look at your income. Earning more, Leahy said, is “easier said than done,” but consider working additional hours or adding a second job if you must.
- Look at where your money is going. Leahy offered the guidance put forward by Sen. Elizabeth Warren in a money management book co-authored with her daughter: People should be putting 50% of their income toward needs, 30% toward wants and 20% toward saving for the future. “It will tell you what part of your financial life is stealing from other parts of your financial life,” Leahy said.
- Assess yourself for how you think about money. Watch for rationalizations — expenses that you’ve come to view as essential may be luxuries — and face the financial fears.
- For families and couples, things go smoother when there is teamwork. As with most things between couples, Leahy said, “I statements” help the conversation. The goal is to get everyone moving in the same direction.
- It can’t be all sacrifice. Treat yourself, even if it is a no-cost reward. A day at the beach, a trip to the library or community event. And don’t let the guidelines or goals you set for yourself defeat you, Leahy said. “Do the best you can.”