5 Money is now moving 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 gas prices are wreaking havoc on many people’s wallets.

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

This should come as no surprise with the average price for all items rising more than 11% in the past two years, according to moving review firm Move.org. The company said that the prices of all types of gasoline rose by 48% in the past year, while rental prices increased by 10.75% in the past two years.

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

1. Handle your expenses

People often don’t keep up with their expenses when they are manually entered into an Excel or Google spreadsheet. That’s why Rob Stevens, a retirement income specialist at TIAA, recommends using a free smartphone app that syncs with your bank accounts and credit cards. This way you can be aware of your spending on a real-time basis and make adjustments as needed, he said. There are many free apps to choose from, including Mint and NerdWallet.

2. Cut down on spending where you can

Even small cuts can make a big difference overall. Try to buy generic products, which tend to be less expensive than brand names, and buy merchandise for sale, when possible, Stevens said. You could also consider canceling some streaming services purchased during quarantine, he said. That’s something 35% of Americans told CNBC they were considering doing in an April poll by Invest in You. And even the wealthy are more likely to take that step now, according to a recent CNBC Millionaire poll, especially younger millionaires.

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Another money-saving option might be to buy the car you rent. This may be especially attractive to someone whose lease is coming soon, because the purchase price – which was set at the lease – is likely to be much lower than the cost of a new or used car.

Another expense-saving step might be to ask your current credit card issuer for a lower interest rate. Issuers give such demand more often than consumers would, according to Matt Schulze, senior credit analyst at LendingTree.

3. Debt handling with variable interest rates

The Fed has been raising interest rates and is likely to do so again, which means that the cost of variable rate debt will continue to increase. Paying it off, repaying it, or consolidating that debt into low fixed-rate debt is a way to cash the inflation blow, said Greg McBride, chief financial analyst at Bankrate.com. “It’s an area below the family budget where you will see an increase in cost,” he said.

4. Consider long-term investments

In order to beat inflation, your total return must be greater than the total increase in your cost of living. One way to achieve this outcome is to make long-term investments, said John Campbell, head of wealth planning for the Eastern Province at the US bank’s private wealth management.

While many stocks have been destroyed this year, if you can buy higher-quality company stocks at a lower price over time, for example by taking a dollar-cost averaging approach, you can keep up, if not outpace, inflation. Campbell said this is because historically, over time, overall stock market performance has outpaced inflation.

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

5. Invest in jobs and income potential

Now is the time to think about what you can do to increase the power of your earnings, McBride said. Are there skills you can learn, certifications you can get, or trainings you can sign up for that will lead to higher salaries in the future? While it may not be an immediate return, these steps can eventually lead to higher wages, a way to offset the increased costs caused by inflation, and benefit you in the long run.

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

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