Financial success, or exemplary stewardship, involves both earning money, and the judicious appropriation of those earnings. Astute budgeting is the indispensable ingredient to financial success for both families and businesses, and high inflation magnifies its value, as well as the consequences to those who neglect it. What strategies can you employ on both the income and expense sides of your own budget to tame inflation and thrive in the ongoing stagflationary environment?
Frugality can’t help us if we have no income; successful budgeting requires earning money. Regarding this half of the budget, consider the following:
- Develop a strong work ethic. There is no substitute, and it will give you an advantage in the workplace, but don’t be a workaholic.
- Trade up. Be aware of opportunities for career advancement, and use it as leverage in your present job. Never relinquish your job before securing subsequent employment.
- Continuously advance your skillset, and specialization in your field. Make sure there’s opportunity for this before accepting a position. ?
- Strive for excellence in your daily work, for “a man skilled in his work will serve before kings” (Proverbs 22:29).
- Be creative to find alternative income opportunities. Consider the Charter Economy.
- Don’t retire too early. Big financial implications exist, but work also brings balance and purpose to the years of our strength.
The second half of the budget is the more neglected, and frivolous discretionary spending in a high inflation environment is consequential. Develop the following spending disciplines:
- Know where your money is going. Identify every expense, and categorize each as either fixed or discretionary.
- Minimize fixed expenses with militant comparison shopping. Obtain multiple quotes on all large purchases. Minimize discretionary spending by learning to go without.
- Eradicate impulsive spending. Never buy under sales pressure. Never carry consumer credit balances.
- Have a plan to become debt free. Never retire while in debt. Make sure your debt is invested with “net productivity” (of interest). Treat your debt like a pet scorpion: beat it into submission, starve it, and don’t feel bad if you terminate it!
- Carry emergency savings (equal to 9 months annual household expenses) to negate ‘budget disruptions’.
- Scrutinize off budget spending ruthlessly. Realize less spending carries the same weight as more income.?
Every budget must achieve a ‘net positive cash flow’, meaning, after tax income must exceed gross spending. Once there, consider the following to bring balance and perspective to your financial life:
- Give generously, especially to those who can’t pay you back. Money can’t own those refusing to place too high a value on it.
- Thoroughly enjoy a periodic vacation to recharge your batteries. Enjoy the fruits of your labor, and the blessing of your talents and employment.
- Invest for the future, for you may not always be able to work. “A wise man leaves an inheritance to his children’s children” (Proverbs 13:22).?
- Think about it, Shaun.?
“God loves a cheerful giver” ~2Corinthians 9:7
The opinions voiced in this material are general, are not intended to provide specific recommendations, and do not necessarily reflect the views of LPL Financial. The economic forecasts set forth in this commentary may not develop as predicted.
All investing involves risk including the possible loss of principle. No strategy insures success or protects against loss. Dividend payments are not guaranteed and may be reduced or eliminated at any time by the company.
Dollar cost averaging involves continuous investment in securities regardless of fluctuation in price.?
