I have a secret. I’m a major worry-wart. This is a poorly kept secret to those I live and work with on a daily basis, but one that (hopefully) doesn’t show through my writing. I don’t know if these tendencies were born in struggling financially during my childhood or if they’re a personality trait I was born with. Either way, I worry. A lot.
I also have a habit of following and internalizing financial trends. If unemployment goes down, I breathe a sigh of relief – even though I’m not unemployed. If prices are on the rise, I worry – even though I already live in the most expensive city in America (so prices are always high in my life). I’d like to think that I’m empathizing with my fellow Americans, but I worry (!) that this news is just an artificial way for me to predict the struggles I’ll face financially.
As if that weren’t bad enough, the news we read can be pretty artificial as well. Each financial update we see only tells one part of a story – but there are up and downsides to every trend. The latest? How costs for big ticket items like televisions and other technology are on the decline. How could that possibly be a bad thing? An article in The Atlantic spells out the downside.
Why You Could Pay More for Your Food than Your Refrigerator
There is definite truth to the fact that prices for big ticket items are decreasing. So if you’re in the market for a new refrigerator, then you’re in luck! But what if you’re facing difficulty in earning enough for your food budget? That could be more of a challenge.
A recent article in The Atlantic highlights the fact that, while costs for our expensive toys are going down, costs for basic necessities are going up. So while it’s great that you can pay less for things like a new cell phone, it’s hardly relevant if you’re struggling to make ends meet from month to month. The Atlantic features a graph showing the changes, but here’s a breakdown of what you’ll see:
Increasing costs in: education, child care, health care, food
Decreasing costs in: televisions, phones, computers, clothing
How could this be? Put simply, many of the “toys” we use from day to day are made outside of the U.S. As The Atlantic points out, that price decrease comes at a higher cost in the form of jobs lost through outsourcing. Meanwhile the things we use and pay for locally can’t be outsourced. Each of these things also impact our ability to earn and save money down the road.
For example, if you’re forced to pay a higher cost for healthy food, you may have no choice but to buy lower quality food to make ends meet. But that could eventually impact your health, which will also cost more due to increasing healthcare costs. All the while your best chance at earning more money to cover all of these things is education – which is currently in the middle of a price bubble that everyone’s waiting to burst.
In other words, the need to pay less could lead to outcomes that will cost us more in the long run. As they say, it takes money to make money.
As dire as this may sound, those who live paycheck to paycheck can break the cycle with careful planning. Here’s how:
How to Keep the Cost of Basic Necessities Down
Living paycheck to paycheck can create a never-ending cycle, but the cycle can be broken with some research and a lot of careful planning. Here are a few ideas to help keep the costs of your basic necessities down so you can create more wiggle room in your budget:
One way to keep food costs down is to cook every meal at home. Even though buying groceries feels more expensive in aggregate, it’s infinitely cheaper than eating out. And the fewer pre-packaged foods you buy, the more money you’ll save.
As time consuming as cooking every meal sounds, there are ways to speed up the process. For example, did you know you can microwave eggs in a mug for a one-minute breakfast? Another way to save time is prepare all of your ingredients for the week on a Sunday and pack your lunches in the evening before bed so you don’t run out of time in the morning. Add in some filling snacks for the day such as nuts and fruit and you should feel satisfied and healthy for practically no money. I’ve done this myself and have saved up to $500 a month on food!
Health care is a painful expense. Whether your employer pays each month or you have your own plan, there’s a constant fear that one wrong move or freak accident could lead you to thousands of dollars in medical debt. While it’s impossible to predict the future, you can mitigate health expenses through prevention. That means: working out regularly, eating healthfully, and going to the doctor once a year for checkups – plus any other checkups recommended for your age, medical history, and gender.
While it may seem cheaper to avoid going to the doctor, the long-term cost of doing so could be exponentially higher than any amount saved from avoiding checkups. If your financial situation is tight enough that even the co-pay or monthly insurance bill is a stretch, look into nonprofits and clinics to help. You can also find out if you qualify for Medicaid or the new Affordable Care Act subsidies. There may be ways to save that are just around the corner but that you had no way to know about without doing some research.
If you’re a parent putting your children through elementary school or high school, start saving for college now, even if it’s just a few dollars per month. Doing so will help your children but it could also equal a tax break for you – resulting in more money in your pocket after tax time.
If you’re in college, start paying on your loans before you graduate. That small amount each month will add up a lot after four years of school! If you already graduated and are struggling to make your monthly payments, see if you qualify for the IBR or Pay As You Earn Program. This won’t help you make a dent in your long-term debt, but it will free up a lot of money in your monthly budget.
Using Preparation to End the Worries
Some part of me thinks I’ll never stop worrying. I could probably win a million dollars tomorrow and still get nervous about the latest economic trends. If harnessed productively, this worry might not be such a bad thing! My humble background has taught me how to stretch a dollar and this knowledge, mixed with a lot of preparation, helps me keep my finances in check. Plus, it motivates me not to take a thing for granted. At the end of the day, we can prepare so that we have more control over our financial futures – so worry can start to become a thing of the past.
Image Credit: Robert S. Donovan