A Fiduciary's Ten Tip Guide to Budgeting During Market Uncertainty

A Fiduciary's Ten Tip Guide to Budgeting During Market Uncertainty

February 22, 2023

With current market uncertainty, budgeting may seem important now more than eve. Truthfully, a solid budget can go a long way towards positively impacting someone's financial well-being. While budgeting may seem overwhelming, it doesn't have to be. In this post, I'll share a fiduciary's top ten biggest budgeting tips during market uncertainty to help you achieve your financial goals.

To get started, feel free to download FFP's Personal Budgeting Worksheet.

1. Create a realistic budget.

The first and most crucial step to budgeting is creating a realistic budget. Your budget should account for your income and expenses, including monthly bills, groceries, transportation, and entertainment. Be sure to factor in irregular expenses, such as car repairs or medical bills, to ensure that you have enough money set aside to cover unexpected expenses.

2. Track your spending

Tracking your spending is critical to budgeting success. Record all your expenses, including small purchases like coffee or snacks. This will help you identify areas where you're overspending and where you can cut back.

3. Prioritize your expenses

When creating a budget, prioritize your expenses. Start with your essential expenses, such as rent or mortgage payments, and then work down the list. Prioritizing expenses ensures you meet your basic needs before spending on non-essential items.

4. Set financial goals

Setting financial goals is an essential part of budgeting. First, determine what you want to achieve financially, such as paying off debt, saving for a down payment on a home, or building an emergency fund. Having clear goals can help you stay motivated and on track with your budget.

5. Use the 50/30/20 rule.

The 50/30/20 rule is a popular budgeting strategy that can help you allocate your income effectively. According to this rule, 50% of your income should go toward essential expenses, 30% toward discretionary spending, and 20% toward savings and debt repayment.

6. Cut unnecessary expenses.

Cutting unnecessary expenses is an easy way to free up more money in your budget. Look for areas where you can trim spending, such as eating out less frequently or canceling subscription services you don't use.

7. Use cash for discretionary spending.

Using cash for discretionary spendings, such as entertainment or dining out, can help you stay within your budget. When the cash runs out, you know it's time to cut back on non-essential spending.

8. Automate your savings

Automating your savings is an effective way to build wealth over time. Set up automatic monthly transfers from your checking account to a savings or investment account. This way, you're consistently saving without having to think about it.

9. Review and adjust your budget regularly.

Review and adjust your budget regularly to ensure it meets your needs. Life circumstances can change, so be sure to update your budget accordingly.

10. Seek professional advice

Finally, feel free to seek professional advice when it comes to budgeting. 

Budgeting is a crucial aspect of financial management, and following these tips can help you achieve your financial goals. Remember to start with a realistic budget, track your spending, and prioritize your expenses. Use the 50/30/20 rule, cut unnecessary expenses, and automate your savings. Finally, regularly review and adjust your budget, and seek professional advice when needed. With these tips, you'll be well on your way to financial success.

However, it's also important to consider current market concerns and their impact on you when creating your budget. During market uncertainty, consider some of the following when building your budget. 

  • Build an emergency fund.

An emergency fund is crucial to any budget, especially in uncertain times. Building an emergency fund can help you weather unexpected financial challenges, such as job loss or medical bills.

  • Prioritize essential expenses

During market uncertainty, prioritizing essential expenses, such as rent/mortgage payments, utilities, and groceries, is crucial. Make sure to cover these expenses first before allocating funds to discretionary spending.

  • Reduce discretionary spending

Reducing discretionary spending is a great way to free up funds for essential expenses and emergency savings. Consider cutting back on entertainment expenses, dining out, and subscription services that are not essential. 

  • Focus on debt repayment.

Paying down debt is essential, but it becomes especially critical during market uncertainty. In addition, high-interest debt can waste your budget and impact your long-term financial goals. So focus on paying down your debts as quickly as possible.

  • Consider alternative income streams.

During times of economic uncertainty, it can be helpful to consider alternative income streams. This could include freelance work, part-time jobs, or selling items you no longer need.

  • Stay informed about market trends.

Staying informed about market trends can help you make informed decisions about your budget and investments. In addition, regularly reading financial news and speaking with your financial advisor can help you stay up-to-date on market conditions.

  • Avoid making rash investment decisions.

During times of market uncertainty, it can be tempting to make rash investment decisions. However, it's essential to avoid impulsive moves and focus on long-term financial goals instead. Consult with your financial advisor before making any significant investment decisions.

  • Stay focused on your long-term financial goals.

Finally, it's essential to stay focused on your long-term financial goals. Times of market uncertainty can be stressful, but it's important to remember that markets are cyclical and will eventually recover. Staying committed to long-term financial goals can help weather short-term market volatility.

Ultimately, budgeting during market uncertainty requires focusing on essential expenses, emergency savings, and debt repayment. Stay informed about market trends, and avoid making rash investment decisions. Above all, stay focused on your long-term financial goals and work with your financial advisor to create a plan to help you achieve them.

Are you ready to get started on your retirement plan? Checkout FFP's Ultimate Guide to Retirement Planning.