5 money moves to make now to stay ahead of inflation

A customer pumps gas into his car at a gas station on May 18, 2022 in Petaluma, California.

Justin Sullivan | Getty Images

Soaring inflation and record high gasoline prices are wreaking havoc on many people’s wallets.

The percentage of Americans feeling the effects of inflation to a high degree has increased, according to a recent survey by consumer research platform Attest, with those describing the effects as “very high” increasing by 5.6 points. percentage in June to 30.5% from a month earlier.

That should come as no surprise, with the average price of all items rising more than 11% over the past two years, according to removals review firm Move.org. Prices for all varieties of gasoline have risen 48% over the past year, while rental prices have risen 10.75% over the past two years, the company said.

Consumers cannot control inflation, but they can make financial decisions that help limit the negative impact of rising prices. Here are five tips to lessen the sting of inflation now and in the future.

1. Control your expenses

People often don’t keep track of their expenses when manually entering them into an Excel or Google spreadsheet. That’s why Rob Stevens, retirement income specialist at TIAA, recommends using a free smartphone app that syncs with your bank accounts and credit cards. That way, you can see your spending in real time and make any necessary adjustments, he said. There are several free apps to choose from, including Mint and NerdWallet.

2. Cut expenses where you can

Even small cuts can make a big difference overall. Try to buy generic products, which tend to be cheaper than name brands, and buy items on sale when possible, Stevens said. You might also consider canceling some streaming services purchased during quarantine, he said. It’s something 35% of Americans told CNBC they were considering doing in an April survey conducted by Invest in You. And even the wealthy are more likely to take that step now, according to the recent CNBC Millionaire survey, especially young millionaires.

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Another option to save money could be to buy the car you are leasing. This could be particularly attractive for someone whose lease is coming to an end soon, as the buyout price – determined at the time of taking the lease – is likely to be significantly lower than the cost of a new or used car. , did he declare.

Another way to save expenses could be to ask your current credit card issuer for a lower interest rate. Issuers grant such a request more often than consumers realize, according to Matt Schulz, chief credit analyst at LendingTree.

3. Tackle variable rate debt

The Federal Reserve has raised interest rates and is expected to do so again, which means the cost of floating rate debt will continue to rise. Paying it off, or paying it off, or consolidating that debt into lower fixed-rate debt is one way to deflect the blow from inflation, said Greg McBride, chief financial analyst at Bankrate.com. “That’s one less area of ​​the household budget where you’ll see cost increases,” he said.

4. Think about long-term investments

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In order to fight inflation, your total return must be greater than the total increase in the cost of living. One way to achieve that outcome is to make long-term investments, said John Campbell, head of eastern region wealth planning for US Bank Private Wealth Management.

Although many stocks have been decimated this year, if you can buy stocks of quality companies at a lower price over time, for example by adopting a dollar cost averaging approach, you could keep pace, or even exceed inflation. Indeed, historically, over time, overall stock market performance has outpaced inflation rates, Campbell said.

Also, be sure to take full advantage of any corporate correspondence that may be available through your company’s retirement plan, Campbell said.

5. Invest in career and income potential

It’s a good time to think about what you can do to increase your earning power, McBride said. Are there skills you can learn, certifications you can earn, or training you can enroll in that will increase your earnings? Although not an immediate gain, these measures can eventually lead to higher wages, which is a way to offset rising costs caused by inflation and benefit you in the long run.

With wages rising, it could also be a good time to ask for a raise, Stevens said. Wages and salaries in the private sector rose 5% in the first quarter of 2022 from a year earlier, in line with the fourth quarter of last year, according to the US Department of Labor. It is also advisable to follow the growth opportunities within your company. Be sure to update your resume so you can take advantage of any opportunities that may arise, he said.

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