Has inflation had a noticeable impact on your life over the last few months? Are you feeling the weight of increased gas and food prices and pretty much everything else you purchase on a day to day basis? So are we! The US Department of Labor reported earlier this week that the Computer Price Index (“CPI”) jumped 7.9% in February from 12 months prior. Inflation is rising so fast that the Federal Reserve is even rapidly raising interest rates to try to combat it, as discussed in a previous blog.
So with increased prices and, in turn, higher interest rates, a CNBC+ Acorns Invest in You survey found that ¾ of Americans surveyed are quite worried about these higher price tags and think they will have to “rethink their financial choices in the coming months.” According to this survey, inflation will result in an extra $296 in spending per month per household. A combination of the coronavirus pandemic, inflation and the war has many Americans feeling quite uneasy about the future of their finances, making it an especially good time to create a new financial plan or alter and refresh an older one. So, as households and individuals start to think about how to adjust for this increase in their budget, let’s discuss some ways in which they can do so.
First and foremost, when thinking about adjusting your financial decisions for inflation, your first thought should be how you can reassess your budget. If you haven’t already, take a good look at your budget to account for higher costs, for example, your monthly gas and grocery spend. By using the “bucket strategy,” you can separate your spending and savings into different categories to help you differentiate your wants versus your needs. Think about using an app or financial software to help you track your spending each month along the way. While adjusting your budget and doing some spring cleaning, go back and make sure you aren’t paying for any unused subscriptions or other fees where you might be spending money unnecessarily.
While these are only a few things you can do to adjust your finances for inflation, getting a handle on your financial “big picture” will ease your stress and tensions as you adjust to this more expensive cost of living. If you are feeling lost and need a “spring cleaning financial plan” to help sort out some of these topics, email us at email@example.com or schedule a complimentary intro call here.