Following the consumer-driven holiday season, a lot of families are starting 2026 by taking a hard look at their finances and tightening their figurative belts. “When did everything get so expensive?” has become a ubiquitous question commonly overheard at grocery stores, restaurants, and — if you found yourself shipping gifts over the holidays — the post office. Prices are high everywhere you look, and for many, healthcare and housing costs are further compounding financial stress brought on by inflation.
“The famous economist John Maynard Keynes once said ‘Inflation is as violent as a mugger, as frightening as an armed robber, and as deadly as a hit man,’” said Eric Greschner, fee-only financial advisor at Regatta Research & Money Management, LLC. “This is as spot on today as it was when he first said this in 1916.”
Just as we try to protect ourselves from theft and physical harm, there’s also an urgency to protect oneself from spiraling financial woes. Inflation can attack somewhat silently, especially if a person isn’t paying close attention to their receipts and bank or credit card statements. Many of us have our routine checklist at the grocery store — have you noticed if you’re paying significantly more for your usual purchases?
“Although the rate of inflation has slowed, there is still compounding on all the previous inflation that began back in 2022,” said Ted Longo, president and senior wealth management advisor at The Longo Group. “Many items are still more expensive than they were three or four years ago.”
According to Longo, there’s another concern as well: market speculation. When there’s increased participation in predictive markets, Longo notes that it rarely ends well.
“Speculation is definitely a bad sign — it means that people are no longer paying attention to risk and are in more of a gambling mindset instead of an investing mindset,” he said.
While today’s high market speculation around artificial intelligence raises the eyebrows of financial advisors and wealth managers, high overall costs have the average person tuned in to their money and spending. So what should families do?
“Clearly, spend less than you make,” said Longo.
The goal is simple but surprisingly hard for many people to accomplish. Basic budgeting is the best way to know what you have coming in and what you have going out. It’s the best way to get the big picture of your family’s situation, whether you’re an individual, a couple with no children, or a large and extensive family household.
“Many investors tend to know what they should do; in reality they often fall short of taking even the most basic steps toward tracking and managing their spending,” said Greschner. Simply increasing awareness of spending and promoting discipline and accountability can have a dramatic long-term impact on one’s financial well-being.
To that end, Greschner recommends creating and managing a written cash flow plan that supports your lifestyle and goals. This should include cash flow planning basics such as income sources, essential and discretionary spending, debt and taxes and goal funding.
“Once this is done, it needs to be analyzed to see where you can decrease spending, pay off any debt and increase your savings,” he said. Once implemented, the plan needs to be tracked on an ongoing basis, and course corrections should be made along the way.
How to begin? At J. Heath & Co. CPAs, Co-owner Jennifer Heath recommends looking back at the last two to six months of bank and credit card statements and categorizing your expenses.
“Begin with broad categories rather than getting lost in the details,” she said. The basic structure that she personally uses includes the following broad-stroke categories: People, Home, Necessities, Education, Work, Assets, Lifestyle, Taxes and Savings. These categories can be used to help you prioritize both your nonnegotiable items and discretionary ones.
While some people have a strict sense of their spending, many of us are simply afraid to look. But for even the careful spender, Longo said there are bound to be surprises when you examine closely.
“It is expensive to dine out, and even the cost of simple pleasures — like your favorite specialty coffee — can add up quickly,” he said.
Many people are mentally living in the past, when a fast-food stop for the kids would be under twenty bucks or when lunch with a friend only set us back $20 to $25. These days, a burger and a beer plus tax and tip can easily be a $30+ ordeal. Sitting down and looking at the hard numbers in your statements will show you just how high that “Lifestyle” spending has gotten.
Another item to consider, according to Longo, is automatic payments. We have become very accustomed to auto-drafts and automatic billing, whether it’s a utility bill or app subscription. When you never see the money exchanged, how well do you remember that it’s even happening? These are important transactions to identify in your budget.
Another tip from Longo is breaking down your larger annual or semi-annual bills like insurance into monthly amounts. This gives you a clearer picture of what you are spending compared to your monthly income and gives you an opportunity to adjust if needed.
Once you’ve assessed your spending, where do you set your priorities? Every family has necessities. When prioritizing your spending, Longo said to take care of necessities first. These are items like your mortgage/rent, car payments, utilities, and tuition (if applicable). Then, Longo said, the compromising starts.
“Anyone who has been in a relationship for any length of time knows that compromises need to be negotiated and agreed upon,” he said.
He suggests looking for that can be eliminated or cut back. For instance, how much would you save by brewing your own coffee in the morning? Have you examined your automatic payments? Are you actually using the services you’re paying for?
Beyond adjusting spending, Greschner adds another budget priority: determining your financial goals.
“We suggest they start prioritizing their goals by assigning a time horizon to each goal along with its associated costs,” said Greschner. Then, he said, review how the different goals may compete and allocate resources according to greatest importance.
“Finally, adopt realistic expectations and adjust goals as necessary to get the optimum trade-off for each goal and spending category.”
A short-term, one- to three-year goal might include building up emergency savings, buying a car, or paying off high-interest debt. A medium-term goal of three to ten years could include major home renovations, saving for a child’s education, or starting a business. Long-term goals could be building retirement savings, paying off a mortgage early, or building generational wealth.
“Communicate among family members to determine overall family values and make sure they align with your family’s goals,” said Greschner. “It is important to have buy-in from all family members—especially at the beginning—to increase the probabilities of a successful outcome,” he said.
Heath agrees and said her adult children still reminisce with eye-rolls and laughter over their family’s Saturday morning meetings.
“We had a weekly budget check-in before we did any fun for the weekend, comparing our actual spending to our planned,” said Heath.
Another budget tip from experts is to pay yourself first.
“The 401k came out just before I started my career, and it is a fantastic savings tool. It is a great way to pay yourself first, and many companies offer a match on some part of the savings,” said Longo.
Heath echoes this sentiment.
“Anything that can be transferred automatically on payday out of your checking account and into savings will help you reach your savings goals,” she said. She recommends the savings app SmartyPig because it lets you save according to your specific goals.
There’s no shortage of budgeting apps available, from the general to the niche. Eric Greschner’s top picks for general budgeting are Rocket Money, Quicken Simplifi, and Monarch Money. Some budget apps feature options for partners/spouses to view or co-manage accounts.
“If the apps are utilized on a consistent basis, they can be very useful by encouraging awareness, accountability, and positive reinforcement,” he said.
Longo adds, “There is an old saying, ‘If you cannot track it, you cannot manage it.’ Apps are helpful if you use them. Old fashioned pencil and paper is also an effective option.”
Tax season is drawing near, and a number of changes for tax year 2025 could impact your budget. According to Heath, important tax changes that may affect families this year include changes in deductions such as the Tip Income Deduction, Senior Deduction, Overtime Deduction, and Above-the-Line Vehicle Interest Deduction. Additionally, the Child Tax Credit has increased from $2,000 to $2,200 per qualifying child. The seven federal tax rates remain unchanged, but the income thresholds have increased, which may result in income being taxed at a lower rate. Experts suggest talking with your tax preparer about these changes and others.
One final note on budgeting: “Keep in mind that perfection is the enemy of good,” said Greschner. “Waiting for your budget to be perfect often prevents you from finishing or making progress. Doing something well enough is usually far better than doing nothing at all,” he said.
Disclaimer: The content of this article is for informational purposes only. Do not construe any information or other material as official legal, tax, investment, financial or other advice. This article is not a substitute for personal advice from a financial professional.
