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5 changes to make with your money now to survive inflation

  • Worried about the impact of inflation on your overall financial situation? Money experts have advice.
  • Start by checking your money more often to reduce your spending as needed.
  • Also, don’t hold onto excess cash at the moment, and get rid of high-interest debt as soon as possible.

One of the financial buzzwords that seems to be entering the majority of my conversations these days is inflation. It shows up at dinner when restaurants share that they’ve had to raise their menu prices (for many reasons, including inflation) and it’s evident when you browse prices at grocery stores, gas stations, and even retailers.

According to the Bureau of Labor Statistics, the consumer price index, which measures a range of goods and services, rose 7.9% in the past 12 months, a 40-year high.

With all the talk of inflation, I started wondering if this was something I should consider with my own personal finances and investments. If so, what should I do and how should I start?

“Inflation is definitely something to consider when planning. It’s called a stealth tax – it erodes the value of your assets, capital and purchasing power,” explains financial planner Eric Brotman. “The part that may be the most difficult is that we haven’t seen inflation like we’ve seen now for many years, so we have generations that have never experienced it.”

I decided to turn to financial planners for their advice on what to do with my money.

1. Check your finances more often

I make it a point to monitor my finances weekly, but financial planner Marigny deMauriac recommends checking your cash flow more often, as inflation can impact your finances at different times.

“Not all items experience inflation at the same rate. Regularly reviewing cash flow is key,” says deMauriac. “Set a date once a month and add it to your calendar. You want to know how much money is coming in and where it is going out. For example, gasoline is more expensive lately. If you’re spending more money on gas to get to work, you may need to cut back on your spending in other areas to avoid overspending. Small changes add up over time, even if it doesn’t feel immediately rewarding.

2. Examine the cash

I have a lot of money in a savings account, which Brotman says is a bad decision. He says it’s important to recognize that inflation prevents this cash from growing.

“Money lags behind the cost of all goods and services, so you’re essentially getting a negative return on your money,” Brotman says. “Cash is no longer a useful asset to hold for accumulation. You should always hold cash for emergencies and


, but it will continue to underperform. It may be time to diversify excess cash into another asset class.”

3. Pay off your debts

One of the many ways inflation can harm a person’s finances is through its impact on their debt. Financial planner Jay Zigmont says it’s important for people to focus on deleveraging during this time.

“The combination of inflation and rising interest rates means that debt will take a much larger share of most people,” Zigmont says. “Average credit card interest rates are expected to rise from 16% to 17%. Add the increased interest to higher prices for everything, and you should expect your balances and minimum monthly payments to increase. ”

Zigmont recommends locking up your credit cards so you don’t get into more debt and delay taking out new loans. “If you want to make progress in getting out of debt, you have to stop adding more,” says Zigmont. “Then set a goal to pay off your debt as quickly as possible.”

4. Try to increase your income

If inflation is having a huge impact on your lifestyle or budget, deMauriac recommends not only reviewing your cash flow, but also trying to find ways to increase your income to deal with the rising cost of goods. and services.

“That could mean taking on a second part-time role, having a side hustle, upskilling and changing careers, negotiating a promotion or a pay raise, or looking for a new job opportunity,” deMauriac explains. She recommends business owners examine their service offerings and billing structures to find new opportunities to generate revenue.

5. Reconsider your bond investments

When checking your investment portfolio, Haley Tolitsky, a financial planner, advises you to pay attention to your fixed-income securities (including bonds, cash and CDs), as these are most affected by periods. high inflation.

“When interest rates rise, bond prices fall due to the fact that new bonds will be issued offering higher interest payments,” Tolitsky explains. “If you have bonds in your investment portfolio, make sure you’re not investing too conservatively for your time horizon and consider short- to medium-term bonds rather than long-term bonds, which are more sensitive to changes in interest rates. Stocks, on the other hand, tend to far outpace inflation in the long run, although they may face short-term


with the changes in the economy.”

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