Little things you can do when everything else feels so out of your control
By Paris Giles
FIRST PRINTED IN THE JANUARY/FEBRUARY 2023 ISSUE
We called on three financial experts for their advice on how best to recession-proof your family and make the smartest money moves this year and beyond.
Moving toward financial stability is no different than any other task in that it helps to know your end goal. Mike Gorman, certified financial planner at financial advisory firm Experience Your Wealth, estimates that 90% of his clients are in their 30s and 40s, and parents with younger kids or in the family planning stage.
Gorman’s advice? Don’t worry so much about what others are doing and instead set goals that are specific to your own family and needs. For instance, especially with kiddos, it may be more valuable to you to prioritize experiences and making memories than tucking every extra cent away. There’s a way to do that smartly.
Financial literacy coach Sharita Humphrey likes to tell her clients to write down their goals. But don’t just stick them in a drawer somewhere never to be seen again. Display them prominently on the fridge or some other place where the whole family can see them and be involved. Humphrey says she started teaching her kids about the power of money when they were just 2 years old.
Nia Gillett, CFP and paraplanner at Gen Y Planning, agrees that it’s crucial to teach children smart money moves, especially since finances aren’t covered heavily (if at all) in school. Prepare them to manage their own household finances one day and set them up for success, Gillett says. Give them allowances, and don’t be afraid to say no to things that are outside of your family budget. Use these moments as an opportunity to explain why this week’s hottest item doesn’t make good money sense for your family’s goals. They may roll their eyes in the moment, but they’ll thank you later.
An emergency fund that can cover three to six months of expenses should be the goal, according to Gorman. Especially with inflation delivering dizzying jabs during every shopping trip, this can be a tall task for most families.
But again, it’s about keeping your eye on the goal. He points to I bonds as a favored way to start saving and protecting your cash. I bonds are a type of U.S. saving bond where the interest rate moves with the market to protect against inflation, and the principal can’t be lost so the risk is lower than with traditional investments. Interest is earned monthly and compounded every six months.
Or, or in addition to, Gillett suggests setting up automatic deposits into a high-interest savings account, which can have annual percentage yields at 2%, 3% or better — much higher than the average savings account. Plus, Gillett says, you’re more likely to be successful if you can set it and forget it.
The most important thing is that you start somewhere, Humphrey adds. Every little bit counts. Even apps like Acorns, which invests your literal spare change, is another easy way to start saving toward your family’s future.
When it comes to expenses like cell phone plans, insurance carriers and gym memberships, Humphrey says avoid the temptation to marry the first suitor. Sure, it’ll take a little more effort, but she suggests taking the time to shop around and compare to be sure you’re getting the most lucrative deal.
And Humphrey says not to be so strict that you completely shun those family outings, date nights and the things that bring your family joy. But take advantage of discount apps like Groupon and rewards apps like Fetch — which awards points for scanning grocery store receipts, which you can exchange for gift cards and other perks — or programs like Honey, which scans the internet for coupon codes.
The experts say, no matter the state of the economy, it’s all about the budget blueprint. Gorman says give every dollar a job. What’s coming in? What must go out? And where do you have some flexibility? He says it’s important to spend with intention, keeping your family’s goals and values in mind.
In short: Planning helps you avoid overspending and allows you to consider where you may be able to trim, Gillett notes.
You want to try to avoid those impulsive purchases as much as possible, the little things that feel pretty harmless in the moment but add up over time. For example, Humphrey says plan your meals so that you’re not left with DoorDash as your only option (delivery charge + tip + plus service fee = yikes!).
That said, especially with kids, it’s important to factor in the value of time. It may be more complicated to quantify than dollars and cents, but time is precious. Gorman says it’s OK to pay for convenience sometimes. Instead of spending an hour in the kitchen cooking dinner, maybe picking up takeout is the key to more snuggle time on the couch and so it’s worth it. But again, it’s all about planning. Do you have extra this month to swing it, or is there a big expense looming that makes being stricter necessary?
And remember, Humphrey says, that budgets are living things. You should constantly be re-evaluating, readjusting and reimagining.