Taking Back Financial Control When Dealing With Inflation

Economic setbacks, financial restraint, and inflation – these are the words that may have been heard over the course of the past two years. The pandemic has greatly affected lives throughout the world and many countries are witnessing a sudden spike in prices and are dealing with inflation.

Pexels | With gasoline prices sky-rocketing, you can only hope that the economic situation doesn’t stay this way

While you may be worried about the prices right and you might even switch to using public transport instead of your own car, this inflation is more than it seems. You have to consider its implication on your future plans, your retirement, and your savings.

While inflation may have been low for the past 40 years, it doesn’t mean it’s going to stay that way, so you need to prepare yourself accordingly.

With that in mind, we’re here to give some tips on how to make your finances secure despite inflation.

1. Comparing Personal Inflation Rates and CPI

CPI stands for Consumer Price Index and it calculates the change of prices that consumers pay over a period of time. It differs from your personal inflation rate because everyone has different spending habits; the amount of money a single person spends on groceries might be a lot less than someone who has a family.

Pexels |  It is important for you and your plans to become inflation-proof to calculate your PIR

2. Renewing Your Portfolio

Investing has now become essential for anyone seeking financial stability and security. But, your investments can also take a hit because of inflation, so you have to protect them. Now you may be wondering how you protect your assets. The answer is that you opt for investments that are inflation friendly such as stocks, real estate investment, I-Bonds, and treasury inflation-protection securities.

3. Study Your Mortgage

Since the biggest expense on your shoulder is going to be your mortgage, you should examine it once again. Recently, as the market crashed, many people took advantage of the low-interest rates but these people are forgetting the thumb rule when it comes to cash-flow commitment: less is more.

Pexels | Make sure you don’t fall for the same mistakes

One Last Tip…

Inflation cannot affect you if your income is directly proportional to it, this means that as inflation rises, so does your salary. Since wage levels are already influenced by inflation, don’t sit back and allow yourself to be engulfed by the rising prices. You should always look for better opportunities.

There is no way to know what the next year will look like but at least you can try your best to mark yourself safe.