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Your Survival Guide to Inflation

Personal Finance

June 23, 2022

9 important tips to help you through this expensive year

If you are like 91 percent of Americans, you believe inflation is certain to continue through the year. The inflation rate reached a 40-year high, and is currently over 8 percent, meaning just about everything is way more expensive than it was just one year ago. Food and electricity have increased by about 8 percent, gas increased by 38 percent, used vehicles increased by 41 percent, and medical care increased by almost 3 percent. Most of us can benefit from making some shifts in order to survive this new reality.

On average, a recession lasts only 11 months. While the phrase, “this too shall pass” may sound way too casual for the current environment, it is important to take a long-term view and do whatever is within your control to prepare. First, determine how inflation is hurting your household the most and consider these tips to help survive the upcoming months.

Tip #1: Assess your job and income.

‍Instead of focusing on how much inflation is eating away at your paycheck, focus on how many opportunities are out there to increase income. If your current employer is unwilling to increase annual raises or meet the new market, consider changing jobs or adding a side gig for extra cash.

Tip #2: Take on new debt sparingly.

‍It is not the time to take on new debt. Not only because it might cost you more, but it adds to your monthly payments. This reduces your financial flexibility. which is needed in this type of environment. Make a plan to pay off any debt you have as soon as possible.

Tip #3. Change your grocery shopping habits.

‍Plan to buy cheaper products of lesser quality and shift from name brands to generic. You could save 25 percent on virtually the same products that do not feature your favorite names. You may opt for frozen foods instead of fresh vegetables and fruits to save, and they last longer. Also, cut back on dining out and plan to cook more.

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Tip #4. Pay attention to gas.

‍With a tank of gas costing $50 to $100 more these days, it makes sense to plan your trips and errands efficiently. Instead of doing random errands here and there, plan them together. Make one list for the groceries for a once-per-week trip. Also, idling cars can cost up to a half-gallon per hour! Plus reducing driving speed by just 5 or 10 miles per hour can help conserve gas.

**Tip #5. Shop only sales.**

‍Become a bargain hunter and try to resist a purchase unless items are on sale. Search the internet for the best bargain and allow sales to guide where and how you shop. Some retailers are still offering price-matching as well.

Tip #6. Establish a backup emergency fund.

‍It is standard to have three to six months of living expenses in an emergency fund. Now, it is important to save double that amount. Keep an eye out for high-yield savings online accounts. Although rates on savings accounts are low, it is better to earn some interest than none.

Tip #7. Maximize loyalty and reward programs.

‍Make sure you’re signed up for apps and email lists to receive promotional discounts from your favorite places, as well as loyalty points for future freebies. If you use credit cards, pay attention to points earned and redeem them for cash back or merchandise credits.

Tip #8. Reduce your home energy bill.

‍Simple energy consumption changes can reduce your energy bill as much as 25 percent. Turning the thermostat up a few degrees in the summer and down in the winter, switching to LED lightbulbs, washing clothes in cold water and fixing leaky faucets are just a few.

Tip #9. Don’t try to time the market.

‍A long-term investing plan can help beat inflation. It is almost impossible to benefit from selling and then estimating when to jump back in. Take advantage of your employer-sponsored retirement plan if you have one and dollar-cost averaging, as well as a brokerage account. Discuss your plan with your financial advisor to make sure you’re on track.

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If you have questions about your financial plan in this uncertain environment, or would like to discuss creating a financial plan, schedule an appointment on Bayntree’s online calendar by selecting the date and time that is most convenient for you! You can also always reach us by emailing info@bayntree.com.

Bayntree Wealth Advisors provides comprehensive financial planning and wealth management. The Bayntree team specializes in all aspects of financial health, including retirement planning, risk management, investment advice, tax strategies, estate planning and insurance.

Bayntree does not provide specific legal or tax advice. Please consult with your tax advisor or legal professional for guidance with your individual situation.

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