From supermarket shelves and gas station pumps to newspaper pages, it is clear that high inflation is one of the biggest problems internationally at the moment.
«Inflation is definitely something to keep in mind when planning your finances. It’s like one invisible tax – gnaws on the value of your assets, your capital and your purchasing power“, Explains Eric Brotman to Business Insider. «The hardest part is that we have had many years to see inflation like today, so we have whole generations that have never experienced anything like this before.».
Financial advisers gave Business Insider five tips for those who want to protect their money against high inflation:
1. Check your finances more often
According to Marigny deMauriac, no one he has to check his income and expenses often, when prices rise at these rates. The financial advisor recommends doing it once a month. «For example, if you spend more money on gasoline to get to work, you may need to cut back on other expenses so that you do not go out of your budget. Small changes accumulate over time, even if you do not immediately understand the impact“, says.
2. Review your cash positions
Eric Brotman explains that in times of inflation, Keeping a lot of cash in deposit accounts does not help. «Cash is left behind in relation to the cost of all products and services and you practically get negative returns from your money“, says. You should have cash for current expenses and emergencies, but it may be time to divert some of them to other investments.
3. Repay your debts
«The combination of inflation and rising interest rates means that debt burdens people moreSays Jay Zigmont. «Credit card interest rates will increase. If you add to these interest rates and higher prices for everything, then you should expect that both the balance you owe and the minimum monthly payment will increase». That’s why the consultant recommends stop paying by credit card and take out other loans. «To make progress on your debt repayment, you need to stop raising it. And then, set a goal to repay these debts as soon as you can».
4. Try to increase your income
If inflation has a drastic impact on your lifestyle or family budget, deMauriac recommends that you not only control your spending, but also find ways to increase revenue, so you can meet the increased prices. «This could mean taking a second, part-time job, taking on other tasks, changing careers, negotiating a promotion or increase, or investing in a new career opportunity.He explains.
5. Review your bond investments
«When interest rates rise, bond prices fall due to new bonds being issued, offering higher interest rates.“, Explains Haley Tolitsky. «If you have bonds in your investment portfolio, make sure you do not invest too much conservatively based on your time horizon and Consider short- and medium-term bonds, compared to the long-term, which are more sensitive to changes in interest rates. Shares, on the other hand, tend to outperform inflation in the long run, although they may fluctuate in the short term, as changes in the economy».
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