How to Deal With the Emotional Cost of Inflation

And welcome back. Yes, inflation is measured in percentages, but it's also felt in so many moments throughout our lives. Maybe standing at the checkout, doing a mental math, or avoiding medical appointments just for now, or maybe even contending with your rent renewal. That's right. Joining us now to take a look at how you can carve out some breathing room, both financially as well as emotionally, we welcome financial planner Lawrence Sprung. Lawrence, great to see you. Thanks for joining us. Thanks for having me today. Great to have you here. And so let's start with grocery prices. It's always impacted. We've heard a lot over the years about eggs and other things, but what are you seeing in the practical sense and what also people can do about it? Yeah, I mean, prices definitely have come down from the heights of 2022, but I still think people have that shock, that sticker shock that they're seeing, and they feel uncomfortable. So I think the best way to approach it is plan. Plan, like almost everything. Have a budget that you have in mind for what you're going to spend at the groceries or at the supermarket. And utilize coupons if needed. Utilize a calculator when you go. I remember when I was a kid, my mom used to have the analog calculator to keep track of what she was spending. So you make sure that you're not blowing the budget on things that you don't necessarily need. I think those are the important keys. Yeah, much more satisfying in the long run. Yes. Yeah, credit cards have certainly made that harder to do, right? In the old days, two generations ago, people either wrote a check or they paid cash. But your emphasis on find a way to stick to a budget is really important. But another thing that's really affecting a lot of Americans is rent. We just heard Besson say that they're starting to ease now as they're deporting more illegal immigrants or other people are self-deporting and more housing is now coming on. But that's really just starting to take effect. Rent has been a struggle for many people over the last couple of years. Yeah, rent is definitely a problematic and it's not something you see every day, right? You go to the supermarket a couple of times a week, you're seeing that inflationary effect. Rent, you might have a 12-month lease and you may not worry about it for a little while. So I think the lesson here is start that process early. If you're thinking about staying or thinking about moving, take a look and have those conversations and understand what the rent environment looks like. And I think we're in a power position, meaning if things are softening like we're hearing, we can use that to our advantage. Maybe we don't even get lower rent, but maybe we get two, three months free. I was just speaking with a real estate person in Philadelphia because my son's apartment is coming up for renewal in August and we already started talking to him and he said, come to me in May. And he goes, there are some locations where your son wants to be come September that right now are softening and they're offering three to four months rent free if you sign a 16-month lease perhaps instead of a 12-month lease. So use that to your advantage. And typically that's like the biggest thing on most people's budget, right? Their housing. Yeah, definitely. Sounds like a lot more flexibility than many people may be aware of. In terms of the emotional cost here, that's a whole other side to it. You must see that in many ways with people you work with. What's your advice about how to manage that alongside the practical side of things? Yeah, I think it's tough because people are not used to these higher prices and inflation was at bay for so long that we weren't seeing this pricing pressure at all. So it's a new phenomenon that's really kicked in and I think the important thing is, don't be complicated, have a budget, have those major line items like food and shelter lined out and see how you are living up to that, right? And make sure you're not over-complicating things, automate things because the worst thing that can happen is like you said with the credit cards is you put it on the credit card, you do it today in the moment, you pay the higher prices and then you don't make the payment or you make the minimum and now you're racking up interest on that. So make sure that you're staying within that budget, you're only putting on the credit card what you could afford to pay at the end of the month because why pay the bank an extra 20% if you don't have to? And make sure you're making it easy, easing your mind by having a plan going into it and not fretting about it. It seems like if you're trying to live off a budget, you're either spending a lot of time and you're micromanaging everything or maybe you're at the other extreme where you're doing what you just described where you're just like, I don't wanna think about this now, let me just throw it on the credit card and then there becomes this almost like decision burnout of how to try to like cope with those two things. So how do you recommend people just try to simplify and take some of the stress out of their financial decisions? Yeah, I don't think it has to be that complicated, right? It could be fairly easy and the banking system now allows us to really track where our expenses are going a little bit easier but I think saying out loud to yourself and talking it through and writing down what your situation is and understanding it is super helpful, right? Because we are having a lot of burnout. We're making hundreds if not maybe thousands of decisions a day consciously sometimes and subconsciously many others. So we wanna make sure that we're in the moment, we're not blowing through that budget but we also don't wanna create such mental stress. You know, I've seen it before, right? You wanna buy something, you think it's more expensive than it should be and then what do you do? You spend three hours looking to save $15. Never done that ever. You know, everybody's done that and you know what? It's not the $15, it's that time and the mental stress. Is that worth your $15? For some, absolutely and maybe and it might be worth their while to search and hunt that down but others, I think you have to say to yourself, is it worth this mental anguish of going down this rabbit hole online or just pulling the trigger because I need it? And I think that's the important thing. Is this something you need or is this something you want, right? And we've talked about that before. If it's something you want, put it in the shopping cart, leave it there, come back 24 hours later. If it's still something that you think you need or want, then pull the trigger but a lot of times after that 24 hours, you're like, I don't need this, let me delete it out. If it's something you absolutely need, then you might not wanna spend two hours trying to save 15 bucks. And on the flip side of that, you talked about how people will spend maybe hours to save 10 or 20 bucks. How do you suggest to clients to think about their time as money? Yeah, I think you have to look at what your hourly rate is, right? Because especially entrepreneurs, which we work with a lot of entrepreneurs and business owners and we'll say to them, well, what's your hourly rate? If your hourly rate is $50 an hour, $75 an hour, is it really worth spending an hour to save that $15? Probably not, pull the trigger. Or maybe you have somebody who works for you, an assistant that might be able to help you or a virtual assistant that could take that task off your shoulders and find you the lower price and do it at a much cheaper rate because you would be better served focusing on your business and adding value there than saving that 10 or $15 many times. And just lastly, how can people build in control in their budgets and in their lifestyles that just cushions them a little better from anything unexpected that might come along? Yeah, I think having an emergency fund and when I say emergency fund, I really mean emergency fund. I don't mean, hey, we decided to go skiing this weekend, it's an emergency, we need to use that money. So have an emergency fund for those things that might pop up so that if you don't have the cash flow available to fix the plumbing or the appliance, you have that account to go to. All right, well, great to speak with you and thank you so much for coming in this morning. Thank you. Lawrence Strong, Midland Financial.