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With inflation roaring like a hurricane into our lives, many of us have begun to seek shelter by making big shifts in how we handle our money.
Recently, financial services company Charles Schwab surveyed 1,000 participants in 401(k) plans across the nation and asked how inflation is changing their money behaviors.
A full 79% said inflation was impacting their spending, saving and investing in some way. The answers of those surveyed indicate that today’s inflation could have a negative and long-lasting toll on the finances of millions of people.
Following are the survey respondents’ answers as to how inflation is impacting their wallets.
8. Reduced my 401(k) contributions
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Respondents who said inflation is affecting their financial habits in this way: 15%
Even in the most difficult times, it is important to keep saving for your golden years.
Any time you stop contributing to a retirement plan, you rob yourself of both the initial savings and future gains you could make on that money.
But some are finding that inflation has left them no other option than to cut back on their 401(k) contributions.
7. Investing less outside of a 401(k) plan
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Respondents who said inflation is affecting their financial habits in this way: 18%
Even those who are lucky enough to continue making contributions to a 401(k) plan might find that they don’t have the extra cash to make other types of investments.
Historically, investing when the stock market is down — as it is now — has paid large dividends in the future. But it’s impossible to find the money to invest when you are simply hoping to pay your bills each month.
6. Saving less in an emergency fund
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Respondents who said inflation is affecting their financial habits in this way: 20%
You never know when an emergency — from a leaky roof to an expensive medical procedure — will strike. So it’s important to have money put aside for such unpleasant surprises, as we have noted in stories such as “6 Reasons Retirees Still Need an Emergency Fund.”
However, when inflation pushes you to the edge of your budget and beyond, an emergency fund takes a back seat to mere financial survival.
5. Paying off less debt
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Respondents who said inflation is affecting their financial habits in this way: 21%
Perhaps the …….