Is inflation hitting your budget? Tips to hit back

Investopedia explains inflation “erodes our purchasing power” and can affect nearly any product or service (from housing, food, cosmetics to automobiles), and is “a concern because it makes money saved today less valuable tomorrow”.

Although causes of inflation are not within our control, our choices made are.

How to best respond to inflation

Time magazine offers these recommendations:

Make a budget – map out your spending and keep track of how and what you spend (i.e. review and cancel unused subscriptions or opt for house brands when grocery shopping).

• Pay off debt – consider lowering debt before investing. Interest paid on credit cards, personal loans, or variable-rate mortgages may be higher than the growth you can get on an investment.
• Maintain your emergency fund – put money into an emergency fund after paying off debt. This fund is not an investment and won’t earn much interest, but it helps in emergencies.

When inflation is high, MarketWatch financial planner and private wealth adviser Stephen Carrigg says, “If you’re investing, cutting costs, and avoiding highly inflated items where you can, you’re a step ahead of many others”.

Consult a qualified financial planner for personalised advice and other ways to best respond to inflation.

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