Concerns about inflation are all over the headlines. Yes, wages have started climbing, but not as fast as inflation. There is also talk that interest rates may increase. So you might be asking what is inflation? Inflation is when prices increase on different items you purchase. The effect of this increase is your money can buy fewer items. Over time, this can significantly affect your ability to save or even be able to buy the things you want. Inflation typically occurs because people want more of things that are in short supply. This is exactly what is happening in economies around the world today. There are many reasons for the inflation such as supply chains issues, people have excess money to spend etc… However, there are ways to still prosper and stay ahead of inflation.
So, how do you battle the effects of inflation? By keeping your head out of the sand and your eyes wide open! Following are some ways to combat inflation and protect your wealth:
- Review your budget – Be accountable to yourself. When more of your budget is eaten up by everyday expenses- food, gas, etc, there are less discretionary funds available. Adjust your “wants” budget – dinner out, new outfit, etc so that you don’t incur consumer debt. Use an app such as mint.com to track your spending and to see where you need to adjust your budget, so you don’t feel squeezed at the end of the month.
- Talk to your boss about a raise – in times of inflation, unemployment is low and thus employees become more valuable. Companies want to retain their most valued resource- you. Making it a great time to ask for a raise.
- Be selective in your shopping habits – Consider holding off on purchases. Inflation decreases your buying power so it can be difficult to find a good deal. If you must or want to buy now, look for sales. Buy things that are not in style such as summer clothes in the winter. For everyday supplies, consider buying in bulk and splitting costs with family or friends.
- Invest in assets that do well in inflationary times – there are certain assets that do well when inflation goes up such as real estate or assets that pay a high yield. Talk to a financial advisor to see what types of investments make sense for you.
- Review your retirement plan – Have a financial advisor update your plan incorporating the effects of inflation to see how this will affect your retirement plans. Make any necessary adjustments to keep on track.
Inflation is felt by everyone. Minimizing the impact requires diligence in tracking your income and expenses and maximizing your investment portfolio’s chance to stay ahead of inflation. If you can stay aware of your spending habits, you can prosper during inflationary times.
Mario Hernandez has been a Certified Financial Planner (CFP) for over 30 years and brings a vast amount of experience in the financial planning and investment management business. Through Longevity Wealth Management, Mario provides holistic planning services that help clients find solutions to live their best life. Mario’s email address is mario@longevitywealthmanagement.com. Securities offered through Osaic Wealth, Inc. member FINRA/SIPC. Investment advisory services offered through Longevity Wealth Management. Osaic Wealth, Inc. is separately owned and other entities and/or marketing names, products or services referenced here are independent of Oasic. Certain insurance products are offered by Mario Hernandez as a licensed agent independent of Osaic Wealth, Inc.. Mario Hernandez is not affiliated with Osaic Wealth, Inc. or registered as a broker-dealer or investment advisor.
