Okay inflation isn’t really a four letter word, but it sure feels like it! Warren Buffett recently said, “Inflation swindles almost everybody.” So true. There really is no hiding from inflation. It’s not something we can elect out of, or choose not to participate in.
Inflation is persistent and reaches every corner of our lives. We all need goods and services. We all have places to go. We all need to eat and have shelter over our heads. Inflation impacts us in many ways, directly and indirectly.
Milton Friedman famously said, “Inflation is taxation without legislation.” This is probably the most frustrating part.
While we can’t control it, here are some ways to minimize inflation’s impact on your financial life.
Review your budget and monthly cash flow. Pull up your banking app or paper statement. Are there dollars floating away which could be put to better use? If so, make adjustments to tighten up.
Find ways to save money where you can. Cook at home more often. Consider generic brands instead of name brands. Utilize coupons and weekly sales. Buy items you can easily store in bulk. While buying in bulk take advantage of fuel saving options where you shop.
Speaking of shopping, plan ahead. Group errands together to reduce gas used driving back and forth across town. Share a ride with a family member or friend. Depending where you live, walking, or biking may be an option.
One of the best ways to push back against inflation is to put excess money to work. For people who have the risk tolerance, time horizon, and available capital, putting money to work while the economy and markets are down, is a great way to fight inflation. Being a contrarian and consistently buying into market volatility has the potential to provide positive returns over the long haul.
Another key is to evaluate your debt. Is there high interest debt you can pay off? When the market is in a foul mood, utilizing excess cash to pay down debt can be a rewarding decision. Getting rid of debt is a great way to free up cash flow for other financial areas that need attention.
Lastly, look in the mirror. Do you have a specific skill set or experience you can monetize? Something you can turn into a side hustle, or part-time work? When discussing ways to beat inflation Buffett said, “whatever abilities you have can’t be taken away from you. They can’t be inflated away. Skills, unlike currency, are inflation-proof.”
There’s an old saying, “tough times don’t last, tough people do.” We don’t know how long inflation will persist, but taking action to nip inflation where you can will improve your financial life, and also give back a sense of control.