by Rick Munster
Debt Reduction Services, Inc.
By now, you’ve probably noticed that high inflation is all over the news, television, social media, and the internet. If you’ve recently purchased just about anything, you’ve surely noticed the effect of prices rising drastically. According to the U.S Bureau of Labor Statistics, following a 7.9% increase from February 2021 to February 2022, the Consumer Price Index gained 8.5% for the year ended March 2022. The Inflation of 8.5% in March was the greatest in 12 months since December 1981.
Inflation is most commonly caused by a supply or demand imbalance. As the world continues to encounter activities that produce supply or demand imbalances, inflation will continue. While consumers have no control over the pricing of the goods they want and need, here are inflation tips to help you reduce costs, save money, and meet your financial obligation to withstand the greater inflation period.
1. Reduce Your Expenses
If high inflation appears to be overpowering your budget, try cutting out unnecessary costs. Reviewing all of your bills is a good place to start. Once you’ve gathered all of your bills, you can decide which ones you can cut down or even eliminate to save money.
The following are examples of bills that could be eliminated or reduced:
- Utility and energy
- Car insurance
- Home insurance
- Gym membership
- Delivery membership
- Streaming services
- Credit card interest
- And more
You can save money on your phone bill by switching to prepaid service plans or lower-cost plans instead of pricey unlimited data plans. You may be able to save a significant amount of money by reviewing your insurance coverage and getting greater coverage for less.
You can save money on groceries by purchasing only what you need, resulting in fewer purchases. Meal preparation is an easy method to improve your grocery shopping skills. Examine your schedule and plan which meals you’re going to have for each day, then have the recipes on hand. After that, only buy the ingredients you need to make those specific meals (plus some snacks, if needed).
You can save money on your utility and energy costs by turning off the computer if not in use. You can run the dishwasher only when there is a full load. Hang the clothes instead of using the dryer. If not in use, turn off the lights. Instead of using the air conditioner, open the windows for fresh air.
Personal sacrifices can also assist you in dealing with high inflation. You can work out in your apartment instead of paying for a gym membership. Reduce your daily coffee consumption or make your own at home. Try reducing your smoking or vaping habits. Extend the time between haircut appointments, dates, outings, and other activities. Use public transit a couple of times a week to save money on gas.
2. Continue to Invest
When you witness rising interest rates, a sinking stock market, or rising inflation, it’s natural to question your decisions. However, to deal with ups and downs, a robust broad investment plan should be established from the outset. The rate of inflation is significant because it represents the investment’s real worth and spending power.
To retain your purchasing power over the long run, you should determine the correct assets for your investments by considering your:
- Risk tolerance
- Time horizon
Companies that can boost their prices naturally during inflationary periods are among the finest stocks to own during inflation. One example is commodity resource corporations. During instances of inflation, commodities have pricing power that you can benefit from if you invest. Examples of commodities are:
- Natural gas
These commodities will allow you to have a mixed-asset portfolio to hedge and fight against inflation while also balancing the effects of other assets that are more sensitive to overall market volatility. In contrast to the price of a computer, which is subject to manufacturer and distributor pricing modifications, these things’ prices tend to rise.
3. Boost Your Earnings
Increasing your source of income is one approach to combat high inflation. With so many price increases on practically everything, your income should rise to keep up with inflation.
It can be difficult to improve your income overnight, but there are several options you can do to boost your earnings.
- Ask for a raise
- Start a side business
- Ask to work from home
- Get a second Job
The most straightforward strategy to boost your income is to ask for a raise. You can also ask to work from home to save money on gas or commuting. You can ask if you can be flexible; work from home and report to the office only if necessary.
You can also start a business outside of your job. You can make money from your hobbies. Photography is a lucrative business. You can cook and sell. You can sell your catch if you go fishing or hunting. Consider upcycling and selling items if you have an eye for design or are the crafty sort.
Getting a flexible side hustle outside of your full-time job is also an excellent way to increase your earnings. You can sell insurance, teach kids online, and conduct freelance work like online jobs or dog walking for hire, babysitting, and other things.
4. Pay off Any Variable Debt
Pay off any variable debt as soon as you can; make it a priority. As the pricing of almost everything is rising, it can be tempting to get a loan or use credit cards to cover your bills. However, taking on debt can strain your budget. Over time, variable debts may become even more costly and difficult to repay, especially with the high inflation rate.
These variable debts include:
- Credit cards
- Lines of credit
- Personal loans
- Variable-rate mortgages
5. Explore Savings Bonds
Those who are debt-free and have extra money sitting should consider looking into investment options that are both safe and guaranteed to keep up with inflation. Savings bonds are debt instruments issued by the United States government. Because they are backed by the US government’s full faith and credit, US savings bonds are regarded as one of the safest investments. Individuals can buy up to $10,000 in Series I savings bonds per calendar year, and you can invest another $5,000 with your tax refund.
Bottom Line on High Inflation
With the current high rate of inflation, everyone is having a difficult time. Because inflation affects everyone, we should keep our options open and adapt and do whatever we can to deal with it. Our inflation tips can help you; just stick to your strategies and be consistent with them, and you’ll get through this period of high inflation.
About the Author
Rick Munster has been with Debt Reduction Services, Inc. for more than 19 years and has worked in the nonprofit credit counseling industry for over 21 years. He is known for being someone who’d give the shirt off his back for you, and smile while doing it! He takes that positivity and problem solving to consumers when relaying a message of help, hope, and better times ahead. When he isn’t helping consumers regain control of their debt, he loves traveling and seeing new places.