Inflation is one of the most dangerous economic threats. It can sneak up on you and quietly erode your wealth over time. However, there are ways to combat inflation by taking action now before it’s too late.
1. Maintain your standard of living.
When inflation has you down, it can be tempting to get in over your head. But don’t overcommit yourself. You have to limit your spending habits and make sure that you’re only spending as much as you can afford. The best way to ensure this is by making a list of all of the things that you need and want in life (including the little luxuries), then ranking them based on priority (e.g., food > clothing). Once you’ve done this, keeping track of these expenses will help keep them from getting out of hand during times when prices are rising rapidly.*
2. Track your spending.
One simple way to keep your spending in check is to track it. You can sign up for an online budgeting app like Mint or YNAB, or use a spreadsheet on your computer or phone. The key is making sure that you have a system that’s right for you—if something isn’t working, try something else.
What do all these tools have in common? They allow you to see where every dollar went, so they can help give you an idea of where money is leaking out of your budget and giving rise to inflationary pressures. When tracking spending data over time (and comparing it against other sources), you’ll be better equipped than ever before when it comes time to make financial decisions: Should I invest my savings in bonds? Should I take out a student loan? How much would my car insurance cost if I moved across town?
3. Review your portfolio regularly.
Reviewing your portfolio at least once a year is not only good practice, but also may help you limit the impact inflation and market volatility have on your investments. If you’re feeling nervous about the state of the economy or stock market, review your portfolio more frequently to make sure it’s still meeting your goals and risk tolerance.
4. Don’t get nickel-and-dimed on credit card fees.
The first step is to avoid paying interest on credit card debt. If you have a balance, you are losing money every month in the form of interest, which means your purchases cost much more than they would if you paid off your balance in full each month.
Avoid paying for things that aren’t worth it. If you don’t need an item now and won’t find value from it later, it’s not worth spending money on it at any price—even if that price is free! Use this tip to help manage your budget by questioning unnecessary purchases and coming up with ways to get them for free or borrow them from friends instead.
Budgeting is one of the best ways to manage your finances and reduce the impact of inflation. When you budget, you’re creating a plan for how you’re going to spend your money. You’ll be able to see where your money goes each month and decide if it’s being spent wisely or not.
A good budget will help you save money by keeping track of what bills have been paid and when they are due. It’ll also keep track of how much money is left over in case anything unexpected comes up (like an emergency). If there isn’t enough left over after paying all the bills, then this may be a good time to consider looking into debt relief options
6. Take advantage of government assistance programs.
As with any financial emergency, there are many different ways to get help. For example, federal government assistance programs like Unemployment Insurance can provide you with financial support while you’re looking for a job. If you already have a job but still need help making ends meet, there are other options as well. These include the Supplemental Nutrition Assistance Program (SNAP), Medicaid and Medicare, child support payments from your ex-spouse or partner (if applicable), and more.
You can apply for these programs by contacting your state agency that assists in food stamps or cash benefits. You’ll need to fill out an application form and provide proof of your eligibility before receiving any funds from these organizations. If you’re interested in other types of government assistance programs such as SNAP or Medicaid/Medicare check out our article on how exactly they work here!
7. Put together a financial plan.
- Financial planning is a process. It’s not something you do once and then forget about it, like when you get your teeth cleaned or have your car serviced.
- Having a financial plan in place will help you make decisions about your life, money and future. You’ll know where to invest and save, what type of car to buy, how much insurance coverage to get and so on. A financial plan will help keep you on track so that inflation doesn’t catch up with you later in life—and who wants that?
8. Work longer before retiring.
The first option is to work longer. It’s not a one-size-fits-all solution, but it can be done if you want to. Consider:
- If you have health issues and have trouble keeping up with the demands of your job, then working longer could help you save more money by increasing your retirement savings.
- If you’re young and have plenty of time left on your clock, then starting early may give you an advantage over someone who waits until age 65 or later before collecting benefits.
9. Get a second job or become a 1099er.
As the economy stagnates and inflation rises, employers are finding it more difficult to maintain steady wages. The only way to beat inflation is to get a second job or become a 1099er and start your own business.
- Get a second job. If you’re lucky enough to have one, use it! You’ll be able to save up for retirement in no time at all. Just make sure not to burn out with too many hours on the clock.
- Become a 1099er (or subcontractor). There are lots of ways you can do this—you could freelance as an accountant, write blog posts for clients online (like me!), or drive the Uber/Lyft circuit until they don’t need drivers anymore due to driverless cars taking over. The possibilities are endless!
10. Downsize or live in a less expensive home.
Downsize or live in a less expensive home. If you’re paying too much for your home, consider moving to a cheaper area or downsizing to a smaller house. The average cost of living increases every year as well, so this may also be an option if you are struggling with inflation.
You could also consider buying a home that is more energy efficient. Energy efficient homes can save money on heating bills and electricity costs, which can help offset inflationary pressures on prices over time.
Your financial life will be easier if you are proactive about battling the effects of inflation.
- You can beat inflation.
- If you are not proactive about battling the effects of inflation, it will beat you.
- Proactive people are happier and more successful than reactive people.
By following these tips, you’ll be able to keep your financial life on the right track. Remember that inflation is a challenge that affects everyone, but by being proactive and doing the right things now, you can mitigate its effect on your finances today and in the future.