In July 2021, consumer prices rose by 5.4% compared to the same month last year. According to the U.S. Department of Labor, the cost of dining out experienced its biggest one-month jump in four decades. Meanwhile, the cost of making meals at home has risen compared to last year as well, with beef increasing by 6.5%, pork by 7.8% and whole milk by 8.1%.1
Higher prices have a way of eroding our buying power. While today’s higher inflation is largely attributed to pandemic-related supply chain issues (including labor) and increased consumer demand, that is little consolation for households trying to make ends meet on the same budget they had last year. For retirees on a fixed income, this can be particularly challenging. If you’re looking for ways to squeeze more income out of your assets, give us a call. We can help brainstorm ideas for using income-generating insurance products.
One popular strategy is the zero-sum budget, when you set up a budget that basically consumes your entire household income, with no room for excess discretionary spending. Every dollar is either spent or saved, leaving you with a balance of $0 at the end of each month. This strategy can help identify your expenses to the dollar and figure out where you tend to overspend. Moving ahead, the zero-sum budget can help prioritize how you spend your money and increase your savings efforts.2
Another tactic popular among young adults is what amounts to a “layaway” app. These smartphone-based services — such as Klarna, Quadpay and Affirm — are designed to be a payment intermediary between retailers and consumers. The consumer can purchase a product and take it home immediately but spread the cost throughout four installments in a six-week period without having to pay interest or fees. The app makes its money by taking a percentage of the purchase price from the retailer, similar to how credit cards work. This tactic is very appealing to Millennials and Generation Z consumers because they can buy now and pay later without having to pay interest. According to Credit Karma, about 42% of Americans have used a so-called layaway app at least once.3
Also consider retaining some of the household changes you made in the past year and a half, even as the economy continues to open up. After all, some of the “investments” we’ve made throughout the last year are still worth continuing and can have a great effect on our long-term health — both physical and financial. For example, staying home and watching streaming services is a lot cheaper than going out to movies — especially considering the cost of popcorn and snacks.
Working from home and fewer dining choices led approximately two-thirds of households to eat more meals at home. In fact, a recent survey found that 92% of families say they plan to continue eating at home at the same rate post-pandemic. Many families started gardening more, shopping less and spending more time exercising at home instead of paying gym fees.4
If you were inclined, like many Americans, to spend excess savings on home improvements in the past year, consider that money well spent on increasing your home’s value.
The Federal Reserve Bank of Kansas City reported that Americans increased their savings from 7.2% in December 2019 to a record high of 33.7% by April 2020. In designing your monthly budget going forward, think about continuing those savings, maintaining a healthy emergency account and retaining the habits that generated those extra savings.5
Fresno Financial Consultant Takeaways
Fresno portfolio advisor- Soutas Financial appreciated these points:Higher prices have a way of eroding our buying power. While today’s higher inflation is largely attributed to pandemic-related supply chain issues (including labor) and increased consumer demand, that is little consolation for households trying to make ends meet on the same budget they had last year.Another tactic popular among young adults is what amounts to a “layaway” app. These smartphone-based services — such as Klarna, Quadpay and Affirm — are designed to be a payment intermediary between retailers and consumers.Also consider retaining some of the household changes you made in the past year and a half, even as the economy continues to open up. After all, some of the “investments” we’ve made throughout the last year are still worth continuing and can have a great effect on our long-term health — both physical and financial.
Diversifying your retirement assets among a variety of vehicles and alternatives—both insurance and investment oriented, depending on what is appropriate for your situation—may offer you a better chance of meeting your retirement income goals throughout your lifespan. We help our clients with problems sometimes associated with retirement such as stopping spend down and avoiding probate. In doing so we leverage Medicare long term care as well as risk management designed to help accomplish those goals.
When searching for Fresno financial advisors, look no further than Soutas Financial & Insurance Solutions Inc. your Fresno financial planning consultant is committed to helping take the complexity out of retirement planning. By using a variety of insurance and investment strategies that focus on Asset Protection, Long-Term Care Strategies, Legacy Planning, Tax-Efficient, Strategies IRA, 401(k) & 403(b) Rollovers, Life Insurance, Annuities, Medicare, we can help you develop an overall retirement income strategy specific to you and your family. We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to get your retirement plans on track for success!
Content prepared by Kara Stefan Communications.
1 CBS Miami. Aug. 11, 2021. “Cost Of Living Continues Rising.” https://miami.cbslocal.com/2021/08/11/cost-living-continues-rising/. Accessed Aug. 15, 2021.
2 Taylor Locke. CNBC. Aug. 9, 2021. “Did you overspend this summer? Zero-sum budgeting could help you save more.” https://www.cnbc.com/2021/08/04/what-is-zero-sum-zero-based-budgeting-.html. Accessed Aug. 15, 2021.
3 Sasha Hupka. Los Angeles Times. Aug. 11, 2021. “Sleek, new credit apps target a young generation already drowning in debt.” https://www.latimes.com/politics/story/2021-08-11/sleek-new-credit-apps-target-a-young-generation-already-drowning-in-debt. Accessed Aug. 15, 2021.
4 Jami Farkas. Go Banking Rates. Aug. 13, 2021. “Extra Fees You Took on During the Pandemic That Are Still Worth Budgeting For.” https://www.gobankingrates.com/money/financial-planning/extra-expenses-you-took-on-during-the-pandemic-worth-including-in-budget/. Accessed Aug. 15, 2021.