Tips to Defeat the New Bogeyman: Inflation
Surviving High Inflation
With inflation at a forty-year high, the rising cost of living is affecting everyone. While you may feel some level of distress as you watch the steady decline in your purchasing power, you do not have to sit idly by while it happens. Here are some things you can do to survive this time of high inflation, no matter how long it lasts:
Reevaluate your spending. Most likely, your income is not increasing at the same rate that your expenses are increasing, so one way to counteract these rising costs is by lowering your expenses. Start by looking at how much you are spending each month. Then, look at what you are spending your money on.
Are there unnecessary expenses that you can cut out?
Are there monthly subscriptions being billed to you that you have forgotten about? Are you using that gym membership, or have you subscribed to multiple entertainment services when one or two would suffice?
Are there ways to reduce the cost of necessary expenses? For example, are there cheaper options for your cell phone service (e.g., a prepaid or a limited data plan) or your auto or home insurance? Often, a simple phone call or internet search can end up saving you hundreds of dollars.
Consider a side hustle. If you have cut as much from your expenses as you can but you still come up short, you may need to look at ways you can increase your income. The options for a side hustle outside of your nine-to-five job are only limited by your imagination and creativity. You could offer services such as photography, petsitting, or tutoring on any variety of topics, from gardening to laying tile to writing essays. You could sell handmade items online on Etsy or items that you no longer want on eBay or Facebook Marketplace, or rent property that you do not use all of the time, such as a recreational vehicle on sites such as Outdoorsy or RVshare, or even your pool on Swimply. The possibilities are endless. (Note: do make sure you are adequately covered through your liabilty insurance company before you do this!).
Use increasing interest rates to your advantage by investing even small amounts of money. If you have money in an account that earns interest at a rate below the inflation rate, consider putting that money in an account where it can earn a higher interest rate. For long-term savings, consider purchasing Treasury I savings bonds. The interest rate for I-bonds is designed to meet or beat inflation, and the current annual rate is 9.62 percent.1 For short-term savings that you may need to access, such as an emergency fund, consider using a high-yield savings account.
While it can be frustrating to watch rising inflation rates eat away at your spending
power, you do not have to just sit by and watch. Be proactive, and use these tips to fight
back.
1 Jason Stauffer, Inflation is Hitting Everyone’s Budget. Here Are 4 Ways to Hit Back, NextAdvisor (May
19, 2022), https://time.com/nextadvisor/investing/how-to-deal-with-inflation/.
