Nowadays, every news outlet seems to be sounding the alarm about high inflation. While that might make you want to panic, you don’t have to. You can fight inflation with a few adjustments and possibly benefit from the current economic climate.
Below are 5 ways to combat inflation and make your money work harder.
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 precisely where your money is going because it’s not going to go as far as it used to.
When inflation is high, reassess how much you are spending and then identify ways that you can save. This will ensure you’re putting those less-powerful coins to good use. Expenses that were once worthwhile at a lower price may need to be eliminated for the time being.
Keep an emergency fund
An age-old piece of advice is to make sure you have 3-6 months of emergency cash before investing in anything else. This means you’ll have something to fall back on if times get tough without having to rely on credit.
Interest rates on savings accounts are typically low; however, it is still something. And you’ll thank yourself if you ever need to use this fund and avoid going into debt.
Invest extra cash
Don’t keep an excess amount of cash on hand because it won’t work very hard for you, invest it.
By investing your money, you are likely to receive higher returns than what you would by having your money in a savings account. In the long run, this will pay off, especially if you let your investment sit long-term.
Diversify
Talk with your financial advisor to ensure that your investments are doing as much as they can for you.
When inflation rises, try to think of what commodities people need regardless of how much they cost. Natural gas, oil, and other commodities are tangible things that are always needed.
Businesses selling these commodities can raise prices because they know that no matter the circumstance, they’ll always have a buyer. While this is painful for the consumer, it’s helpful for the investor.
Increase your income
Unfortunately, there is no way around it. High inflation can make it really tough to cope, especially when it comes to staples such as food and rent rising in price. There may be no other option but to try to increase your income.
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 a convenient time to find a side hustle as the gig economy has never been more robust.
Nobody wants to pile on more work hours; however, 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 some security.
Final thoughts
While it’s never easy, most of us have lived through high inflation and will again. You will get through it by making wise choices with your money, and you can even sometimes come out a little ahead.
If you have any questions, feel free to Join the conversation…