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You Can Survive Inflation, Here's How

2022-08-02

Almost everything costs more these days.

Over the last year, inflation has risen at the fastest levels since 1982.

Americans are feeling the pain at the pump, in grocery stores, and practically everywhere in between. Beef prices are at record levels, gas costs are skyrocketing, and even used cars are up 30% from two years ago.

While these short-term costs are painful, they show little sign of abating.

According to MarketWatch,High inflation isn’t going away anytime soon as the Fed had hoped. Even a rapid and sharp increase in interest rates — which no one expects — would have little effect in the short run.

That leaves us with only one choice: to adapt to the times and curb costs wherever possible.

Here are four quick tips to help you fight against the lingering effects of inflation.

1. Eliminate Non-Essential Expenses

This is simultaneously the easiest and hardest tip we can offer.

On the one hand, it’s “easy” because it’s something you can do right now. You simply need to review your expenses and cut out the ones that aren’t essential.

Then again, it’s “hard” because non-essential expenses are usually the most fun, such as dinners downtown, delivery at home, and cappuccinos at the local coffee shop.

While such non-essential expenses are certainly enjoyable, they add up in a hurry. In fact, the average American spends nearly $1,500 a month on non-essential expenses — about $18,000 a year.

When you have time, take a few moments to identify your non-essential expenses and put them on hold — at least until inflation slows down.

According to a Moody's Analytics analysis, inflation costs households an extra $276 a month. In other words, you don’t need to cut out everything to curb the effects of inflation.

You just need to make a few adjustments to strengthen your financial health.

2. Strengthen Your Budget

After reducing discretionary spending, you will be in an ideal position to restructure your budget.

And if you are new to budgeting, you’ll be in a great place to start!

During periods of inflation, a budget is especially powerful. Even Warren Buffett, one of the world’s most successful investors, sets a budget for his daily McDonald’s breakfast.

When I’m not feeling quite so prosperous, I might go with the $2.61, which is two sausage patties, and then I put them together and pour myself a Coke. $3.17 is a bacon, egg and cheese biscuit, but the market’s down this morning, so I’ll pass up the $3.17 and go with the $2.95.

Budgeting is useful, no matter who you are.

Note: Need help getting started? Use modern budgeting apps to save money. For example, you can download the GasBuddy app to find the cheapest gas nearby, or use Mint to help you structure your spending and start saving money.

3. Pay Off Debt

When you carry around debt, you spend your hard-earned money on interest — rather than on your financial future.

And if you make just the minimum payments when paying back your loans, you’ll accrue more interest, thus you’ll pay more money in the end.

After all, your dollars are already losing their purchasing power. As goods and services become more expensive, you will need more money to buy the same items that cost less just days before.

Do whatever it takes to pay off your debt as soon as possible. By restructuring your budget and eliminating non-essential items, you may be in a stronger position to get out of the red.

Pursue a Side Hustle

Want to diversify your income?

Now is the time to grab an extra job or two (or as Millennials call it, “a side hustle”). Here’s the good news: with over 11 million job openings available, you have plenty of options to pursue.

If you have budgeted out the next few months and find you don’t have much breathing room, getting an extra gig could help you make ends meet (and even have more fun along the way).

In this digital economy, there are truly countless ways to make money.

P.S. If appropriate, don’t be afraid to ask for a raise at your current place of work. Many Americans are in conversations with their employers right now. After all, even a modest 5% salary boost could make a huge difference for your bottom line.

Make Changes to Help Yourself

Inflation is impacting us all but if we make smart financial decisions like conscious spending, create a good budget, pay down debt or go for that side hustle, we may weather this storm successfully.

Want more credit tips and information on how to beat inflation? Subscribe to our newsletter!

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