Adapt perspective and plans when faced with change
I recently had the opportunity to travel outside of the U.S. In addition to experiencing a new culture, I experienced sticker shock. Prices on average were about three times what I am used to paying at home. A sandwich and chips cost about $20 and a souvenir T-shirt was $40. But what was more surprising than the prices was the speed at which I adapted to them.
The first day, I couldn't believe what things cost and was very concerned about my vacation budget. By day three, however, I actually said the words "Twenty bucks for lunch – that’s a pretty good deal." By the size of the lunch crowd, a lot of other people also thought it was normal to pay $20 for a very average cheeseburger.
That's what we do as consumers, isn't it? We adapt. When gas prices threaten to break the $4/gallon mark, paying $3.50/gallon for gas starts to seem like a bargain. Yet if you had told me a few years ago that I'd be happy to pay $3.50 for a gallon of gas, I would have told you that you were crazy.
In many cases, we have no choice but to adapt to rising prices; problems arise, however, when we change our perspective but not our actions. I normalized the $20 lunches during my trip, but I eventually came home. Thankfully, my four-day trip had limited consequences, but it's easy to see what might happen if that had been my new reality.
Experts recommend revisiting your financial plan regularly to account for changes to your financial situation. Most people only take the time to revisit their budgets when there is a major change such as a decrease in income or the addition of a major financial responsibility, such as a new car payment.
It's imperative to adjust your spending plan when major changes occur. Failing to do so can cause immediate problems and severely damage your financial future. But it is also important to adjust your financial strategy based on smaller changes that threaten to slowly eat away at your money.
When prices rise on necessities such as food and electricity, it can be hard to cut back. If the only option is to pay more, the money has to come from somewhere. Next time you catch yourself normalizing higher prices, remind yourself that every dollar you spend can't be spent somewhere else, and adjust your spending plan accordingly. After all, it's much easier to deal with little changes before they cause big damage.