We want to help you make more informed decisions. Some links on this page — clearly marked — may take you to a partner website and may result in us earning a referral commission. For more information, see How We Make Money.
Inflation is a silent budget killer.
It causes everything to go up, from your groceries to your gas, as the purchasing power of money decreases. During a good year it cuts your buying power by 2% to 3% — today inflation is 8.3%, the highest it’s been in 40 years.
But what does that mean for you? With inflation running rampant, it’s affecting more people, but you don’t have to sit idly by as your bills keep getting bigger. There are steps to take — and actions to avoid — that can help you navigate this period of high inflation, for however long it lasts.
One thing that’s easy to miss with the current anxiety surrounding rising prices is that it’s not impacting everything the same, so it won’t affect every household to the same degree. Personal finance is different for everyone and inflation rates are just as different depending on if you bought a used car, how much you drive and if you have a family or are single, says Ryan Frailich, CFP and founder of Deliberate Finances, a financial planning firm.
To get a better idea of how inflation is impacting you, compare your spending during the first four months of 2021 to the first four months of 2022. A lot of people may be surprised to see they may not have personally had as much inflation as they believed. For others, the full weight of inflation could be a significant finance hurdle to overcome.
Regardless of what your personal situation is, it’s always a good time to reassess your financial decisions to ensure they align with your goals.
Pro Tip
During inflation, don’t panic. Find other ways to offset inflation like continuing to invest, increasing your income or reducing expenses.
How to Deal with Rising Inflation
The best way to combat rising inflation is to return to the basics: Know what you’re spending your money on, have a long-term investment plan and consider ways to increase your income.
Here are a few actions you can take to limit inflation’s influence in your life.
Continue Investing
Investing the cashflow you have, outside of your emergency fund, is one way “to keep up with or even outpace inflation,” says Samuel Deane, founder of Deane Wealth Management, a financial planning firm.
When …….
Source: https://time.com/nextadvisor/investing/how-to-deal-with-inflation/