Inflation is continuing its meteoric rise — 7.9% in February — the highest it's been in 40 years. The Fed also increased interest rates with plans to do it again. With costs going up on everything from gas prices to groceries and home furniture, financial professionals say it's not too late to make changes to help steady your budget.
Now that most of us know what a more expensive tank of gas will cost us each week, take a fresh look at your budget, and list the new prices of your monthly expenses.
Then, Stewart Willis with Asset Preservation Tax and Retirement Services says to focus on paying down debt.
"The single most important thing you can do right now is eliminate your debt," said Willis.
He says you can start with the smallest bill and then snowball the money each time you pay something off to tackle the next one. Or, with inflation going up Willis says an avalanche approach might be better, starting with the highest interest rate and focusing your money on paying that one off first.
"If you've got some of those store cards that are up to 20%, Usery rate, it may make sense to take that approach. I would just say take the approach where you feel like you're accomplishing something in your process," said Willis, who adds you may want to set up auto-payments to make sure you don’t miss a payment because getting hit with a late fee only adds to the problem.
Tapping into savings seems inevitable for a lot of people right now but, he advises you to do your best to preserve an emergency fund to cover three to six months of expenses just in case something big comes up.
"If you can't turn off your money for three months and survive off of what's in your bank account, you really need to create that emergency fund."
Finally, revisit your goals.
You might have to adjust the retirement plan and your monthly savings goals. Willis recommends saving 10-15% of each paycheck in an IRA or employer-sponsored 401(k).
Also, if you are able, investing in stocks could be your best bet to beat inflation.