Higher prices means adjusting financial strategies

By Sharon M. Danes, University of Minnesota Extension

ST. PAUL, Minn. (9/8/2008)—Many of us are feeling the pinch of higher food costs and higher gasoline prices. The combination of these two cost increases is causing people to think about financial adjustment strategies that they and other family members might do.

There are four types of financial adjustment strategies that you might think about:

• Decrease money expenditures
• Increase or extend money income
• Increase household labor income
• Increase household management income

Some of these strategies directly involve money and others substitute other resources such as time and energy for money.

Decreasing money expenditures includes such activities such as delaying purchases or using free entertainment and parks. Increasing and extending money income includes such things as working additional hours or trading services with a friend or another family.

Increasing household labor income occurs when you substitute your skills, time, and energy for money. For example, repairing clothes rather than throwing them away. Or, canning and freezing food you purchased in quantity for less, extending the dollars you have.

Increasing household management income is substituting time and skills to stretch your current income. You might plan spending carefully with a written spending plan. That plan works best if you include family members in its development. Or you might involve children in financial discussions to help cut costs.

One of the things you can do with children is to discuss with them what they would give up so that the money you have will last longer. This activity works best if everyone in the family indicates what it is they will be giving up, including Mom and Dad. Make a list of what each member identified and place it on the refrigerator for all to see. That way you can support each other in those plans to reduce costs.

You can obtain more cost-cutting and saving ideas through interactive assessments on www.ruralmn.umn.edu and click on "Reduced Income." You can discover your scores on all the types of financial strategies and see how you compare to others like you. You also can review "Ways to Save," a compilation of cost-saving measures used by others like you.

Any use of this article must include the byline or following credit line:
Sharon M. Danes is a family relations educator with University of Minnesota Extension.

Media Contact: Catherine Dehdashti, U of M Extension (612) 625-0237, ced@umn.edu

URL: http:// www.extension.umn.edu./extensionnews/2008/adjust-financial-strategies.html  This page was updated Sept. 8, 2008 .
Online Privacy Statement.  Contact Information.

University of Minnesota Extension is an equal opportunity educator and employer.
Copyright  ©  Regents of the University of Minnesota.  All rights reserved.