10 Tips for Keeping Up With Inflation
Over the past two years, the whole world has been hit with notable inflation and rising prices on everything from eggs to building materials to cars. The rate of inflation may finally be starting to cool off a little bit, but that doesn’t mean that everything is back to normal–and regular folks are still feeling the squeeze as their paychecks just aren’t going as far as they used to. So here are 10 tips for managing your budget while we wait for inflation to fall:
- Postpone major purchases as long as you can
If you’re about to shell out a ton of cash on a major new purchase, ask yourself one simple question: “Can it wait?” For example, car values are slowly starting to ease compared to the wild highs they were a year ago, and this trend is expected to continue and maybe even accelerate. We’re already starting to see inflation slow and see some costs come back down to Earth, so if you can afford to wait on making a major purchase, you can save hundreds or thousands of dollars.
- Trim your monthly expenses
Sometimes, the best way to fight inflation is to focus on reducing the costs of your expenses that are less affected by it. Whether that means doing a subscription audit and canceling costly subscription services that you no longer use or benefit from, or calling up your internet, cell phone, and even utilities providers and negotiating lower monthly payments, saving even a few bucks each month on a variety of different bills can help offset the increased cost of your everyday goods.
- Double-down on your budget strategy
If you’ve been keeping a budget, now’s the time to really keep it. If you had your budget in the back of your mind before, bring it to the forefront–really focus on every dollar coming in and out, and you’ll be able to not only keep your head above water, but you’ll be able to see clearly how inflation is affecting your household and what you need to do to compensate.
And if you haven’t been keeping a budget? Well, there’s never a bad time to start, but when inflation is high is a particularly great time to put that pen to paper (or find the right app) to help you manage your finances each month.
- Diversify investments, if you have them
We know that not everybody is playing the stock market, and if all you’re doing is making ends meet and maybe tossing a few bucks into a retirement or savings account, then this tip isn’t necessarily for you. But if you do have money in the market, make sure you’re protecting it by making diverse investments in various categories in order to hedge your risk. The last thing you want in a time of high inflation is for your pet investment to crash and take all your hard-earned savings with it!
- Don’t stop investing
When we’re looking at cutting back on our expenses, it’s so common for us to see monthly savings or investment deposits and say “well, I don’t see that money every day and the markets are down, so why not use it for my bills instead?” But the truth is, markets have historically always bounced back from downturns and continued to grow, and pulling back on your savings and investments now is a sure-fire way to cause far more financial stress down the line as you lose out on that compound interest that’s so crucial for retirement and long-term financial stability.
- Find alternatives for your day-to-day purchases
Sometimes, we just need to make sacrifices to keep the bottom line in-line. On a day-to-day basis, this can be as simple as buying store-brand versions of your regular goods, planning fun at-home game nights instead of going out, or finding other low-cost alternatives to common expenses. When inflation eases, we may be able to relax and splurge a bit more, but there’s always something to be said about tightening your belt when it needs tightening.
- Minimize your financial risk-taking
In times of high inflation or other economic stress, it can be incredibly tempting to take risks with your money in the hopes that it’ll pay off and ease your difficulties. Whether it’s playing the lottery, investing in meme stocks, or falling prey to multi-level marketing programs or pyramid schemes, it’s easy to fall into a “get rich quick” mentality and end up losing significant amounts of money. At any time–but especially when inflation is high–it’s recommended to focus your spending and investing into lower-risk, more-reliable, and more-secure avenues.
- Find a new income source
While there’s plenty to criticize about the proliferation of the gig economy, there are also plenty of benefits, chief among them being that it’s easier than ever to take on a second source of income to help ease the strain of your monthly expenses. Whether it’s offering your skills via freelance contracts, renting out your car via Turo, or starting the business you’ve always wanted, it can never hurt to have additional income–and it’ll even benefit you as inflation cools.
- Get paid what you’re worth
Even in a time of high inflation, we’re also seeing low unemployment. This is giving workers a lot of leverage at the moment, which means it may be a time to advocate to get paid what you’re worth. Whether that means asking for a raise to bring your salary up to market rate, or seeing what other companies may be willing to pay you something more in line with your needs and expectations, this may be a great time to take stock and make sure your paycheck properly reflects the quality and quantity of the work you’re doing.
- Downsize your life
An easy way to fight back against inflation is to simply reduce the amount of stuff we spend money on. Does your family need the 2nd car, or can you sell it and make some extra cash while car values are still in your favor? Are you paying for more house than you need? A smaller house may be an option to save. We’re not advocating blowing up your life, but consider whether you’re putting your money into things that will help secure your future, or are merely “nice to have.”
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Inflation is often called “the worst tax” because it robs you of your purchasing power, without you even realizing it. But by following this advice, you can minimize the adverse effects of high inflation and keep yourself financially stable in the long run.
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