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Inflation is hurting millions of Americans, even those making six figures, according to LendingClub.
Sixty-three percent of Americans are now living paycheck-to-paycheck, up from 60% in October. Among high earners, 47% are living paycheck-to-paycheck, up from 43%.
Although inflation has ticked down to 7.1%, it has remained high over the past year and is crimping how much people can spend and save.
In fact, average hourly earnings are down 1.9% from a year ago, while credit card balances rose 15% in the third quarter from a year ago. That was the biggest annual jump in 20 years.
However, there are four simple, proactive steps you can take to assess your overall budget and be smarter about how you spend your money, according to CNBC.
1.) Audit your finances. Conduct your own audit by listing all of your assets and liabilities, suggests Thomas Racca, manager of the personal finance team at Navy Federal Credit Union. This will guide you to make smarter financial decisions in 2023.
2.) Devise a savings plan. You undoubtedly won’t save unless you make a conscious decision to do so. Make it a priority to set aside some money for emergencies, retirement and financial goals each month—no matter how small. Participating in your company’s 401(k) plan is a great way to make savings automatic—and you’ll hardly notice the difference in your take-home pay.
3.) Reevaluate your budget. In light of lingering inflation, being realistic about what you can and should not spend is important for people at all income levels. “You’ll stay more on track with your financial goals if you’re honest about what you have and can spend,” Racca says.
4.) Be flexible and make changes if necessary. If your basic groceries have gone up from $50 to $70 a week, or the cost of other necessities like utilities is also up, you will need to cut back in other areas to meet that shortfall, Racca says.
None of these exercises are necessarily pleasant, but they can put your finances and your mind at ease.
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