Has the increase in cost of living impacted your spending habits? Are you tightening your budget due to skyrocketing inflation? Well, you’re not the only one feeling the inflationary heat, many Americans are too, especially millennial millionaires. Inflation worsened in May, rising 8.6% annually, much higher than expected due to surging food, rent and energy costs, marking the largest annual increase since December 1981. The Federal Reserve raised interest rates again last week by 0.75% in order to combat inflation, and will continue to do so throughout the following months to come. So, let’s take a look at how Americans are approaching their spending during this changing economic environment.
According to CNBC’s Millionaire survey, “Nearly half of millennial millionaires say higher borrowing costs are causing them to delay buying a car, and 44% say higher interest rates have caused them to delay purchasing a home, according to the survey.” The survey also found that over ⅓ said that recent inflation caused them to move or postpone a trip. It’s interesting to see that not only middle and lower-income individuals are feeling the impacts of inflation, but that millionaires too are feeling the need to re-adjust their budget during this time. With inflation hiking up the prices of almost everything, from everyday gasoline and grocery store prices to luxury items as well, all Americans need to revisit their financial plan.
As we’ve been discussing for some time now, it’s very prudent to get your financial life organized and revisit your financial plan. With interest rates rising, you want to make sure you are aware of all your variable-interest rate debt and make sure that you re-adjust those potentially higher payments into your budget. The cost of borrowing will also become more expensive as well, so you should re-evaluate whether you should still pursue potential projects or loans you want to take out as those things may not make sense anymore given this climate. Lastly, take a look at your overall budget and alter it for this higher cost of living. Check out our blog on how to adjust your wallet for inflation here.
We know higher interest rates and prices can be stressful, which is why having a financial roadmap and working with a financial professional to solve for these changes can lift a heavy weight off your shoulders. Regardless of your net worth or investable assets, you should create a financial plan that will provide you with strategies to reach your financial goals. If you have any questions about reaching your financial dreams or altering your financial plan during this economic downturn and uncertainty, we are here and happy to help. Email us at email@example.com or schedule a complimentary intro call here.