It seems that every news outlet is sounding the alarm about high inflation these days. While it might sound like it’s time to panic, you don’t have to. With a few adjustments, you can handily fight off inflation and possibly even benefit from the current economic climate.
Read on to discover 5 ways you can combat inflation and make your money work harder for you.
Find out what you spend and how you can save
Like most pieces of financial advice, everything starts with a budget. It’s crucial to understand exactly where your money is going because it’s not going to go as far as it used to.
When inflation is high, reevaluate what you spend and then identify ways that you can save. This will ensure you’re putting those less-powerful coins to good use. Expenses that may have been worthwhile at a lower price may need to be eliminated for the time being.
Keep an emergency fund
It’s an age-old piece of advice for a reason: make sure you have 3-6 months of emergency cash before investing in anything else. This means that you’ll have something to fall back on if times get tough without having to rely on credit.
Even though interest rates on savings accounts are typically low, it’s still something. And you’ll thank yourself if you ever need to use this fund and don’t have to go into debt to help yourself.
Invest extra cash
That said, don’t keep an excess amount of cash on hand because it won’t work very hard for you. It’s wise to invest any extra cash you manage to save despite the current high cost of living.
Investing will offer higher returns than having your money in a savings account. This will pay off in the long run, especially if you’re able to let your investment sit long-term.
It’s a good idea to talk with your financial advisor to ensure that your investments are doing as much as they can for you.
When inflation is high, try to think of commodities that people need no matter how much they cost. Natural gas, oil, and other commodities are tangible things that are always in need.
Companies that are selling these things have the ability to raise prices because they know they’ll always have a buyer. While this is painful for the consumer, it’s helpful for the investor.
Increase your income
There’s no way around it, unfortunately. High inflation can make it really tough to make ends meet, especially as staples such as food and rent rise in price. There may be no other option but to try to increase your income to get through it.
The good news is the unemployment rate is at an all-time low. It’s a great time to ask your boss for that raise. It’s also an opportune time to find a side hustle as the gig economy has never been stronger.
While nobody wants to pile on more work hours, it’s a smart move to get yourself through these uncertain times. See if there’s something you can do to bring in a bit of extra cash to give yourself that security.
While it’s never easy, most of us have lived through high inflation before – and we will again. By making smart choices with your money, you will get through it and sometimes even come out a little ahead.