5 financial planners on how to survive inflation

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Here’s what: Financial planners gave us insight on how to beat record inflation

Like most Americans, I have been experiencing a giddy shock over the past few weeks.

I went shopping over the weekend and kept yelling “Inflation!” and shaking his head every time he reached for an item he would normally buy without thinking but could no longer justify spending (ex: $8 for blueberries). I also stopped at the gas station and had to wonder if I was back in California when I saw a pump from Philly priced at over $5 a gallon.

In all, I probably spent $30 or $40 more on food and gas than I did a few months ago.

I decided to seek professional help: I ​​asked five financial planners I know and trust to share exactly what they’ve been telling their clients about beating inflation.

1. Be smart about where you keep cash

If you’ll need your cash in less than a year, Atlanta-based financial planner Malik S. Lee suggests keeping it in a high-yield savings account. “These accounts should increase their rates as the Fed funds rate continues to rise,” he says. For cash he plans to use in the next one to three years, Lee says he’s directing clients to Series I Savings Bonds that currently pay 9.62% ($10,000 limit) and multi-year fixed annuities that pay more than 3.5% (and have no annual limit). ).

2. Focus only on critical home repairs

Chloé A. Moore, an Atlanta-based financial planner, says her high-income clients have mostly been lucky enough not to feel the effects of inflation. However, things between the owners have been a bit more complicated.

Moore says some customers who wanted to make repairs or improvements to their homes have had to put their plans on hold as the cost of materials continues to rise. For now, he says, they’re focused on making only “critical repairs or upgrades that would significantly improve your quality of life.”

3. Reconsider your home purchase if rising mortgage rates would stretch your budget too far

With home prices rising across the country, it can feel like this is a “now or never” time to buy a home. Who knows if prices will stop rising and if they do, will it be discounted? But even though the market is on fire and buying a home may seem urgent, Santa Barbara, California-based financial planner Natalie Taylor says she’s helping clients calculate what rising mortgage rates would mean. for your budgets, which may mean now is not the time. .

“I’ve been calculating the difference in monthly payment for each additional 0.25% interest so clients have a clear understanding of what the higher rates mean specifically for them,” he says.

He also recommends Series I bonds for those looking to protect their emergency funds from inflation.

4. Know your expenses

Spending in an inflationary environment can be dangerous for your financial plans, especially if you don’t know how much more you’re spending now than you were before. Philadelphia-based financial planner Charles Weeks says he stresses the importance of tracking your spending with clients.

“If you don’t know you spend $250 a month on groceries, you may not realize you’re spending $300 now,” he says. “But if you know your normal expenses, you can tell when prices are going up and adjust accordingly. Possibly cut back or buy cheaper replacements.”

5. Be prepared for inflation to hold

No one wants to hear this, but Rockville, Maryland-based financial planner Malcolm Ethridge says high food, gas and entertainment prices may last a while longer, probably a year or so. “That’s mostly due to the Fed’s plans to raise rates a couple more times over the rest of this year,” he says. “If they see that demand is still high enough to warrant a couple more rate hikes, then there’s certainly a chance that inflation will continue to rise a little bit more from here.”

So what can you do? Keep breathing and do your best to budget accordingly. Things will calm down eventually, although we may have to get used to higher prices.

— Stephanie Hallett, Senior Editor, Personal Finance Insider

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