Palm tree and ocean view

This summer, we were all so excited to FINALLY be outside, and seemingly turning the corner with COVID-19. However, other barriers have been placed before us, such as the increase of summer inflation.

If you didn’t know what it was prior to the beginning of the year, I’m sure it has become a part of your vocabulary over the last six months. Currently, it is running hotter than Usain Bolt in 2009. For context, inflation typically should be around 2%, give or take a half percentage point. Currently, it is a whopping 8.6% and that includes items in the CPI, or Consumer Price Index. Everything from food, gasoline, automobiles, home goods, and airline fares are elevated in price from this time last year. Many of us have been feeling the pinch, but here are some ways to combat inflation and still enjoy your summer.

SPEND LESS TO OFFSET SUMMER INFLATION

This seems like a no-brainer when prices for anything and everything are climbing at breakneck speed. Spending less is a remedy that works in any economic cycle. Being more mindful of where you’re spending your dollar is key to saving and investing in the long-term and a prime tool for fighting inflation in the short-term. If we are all honest with ourselves, there may be a few things (not many) that we can decrease our spending on or completely eliminate for the time being. In addition, using creative ways to save money also helps extensively. From riding your bike to work twice a week to save on gas, to eating out less times per month, there are concrete ways to combat inflation.

PAY OFF HIGH INTEREST DEBT

Attacking our high interest debt is always a solid financial choice. In today’s economic climate, it is more important than ever. Because interest rates have been raised over the last three and half months, this means that interest rates on credit cards, which are variable, will increase. So now that interest rate that was 17% or 18% may go up to 19% or 20%. Although a percent or two may not seem like much, it limits your spending power over time and hampers your ability to pay off debt faster. Hyper focusing on eradicating high interest debt should always be at the top of the list when it comes to pinpointing crucial money decisions to make. In today’s times, this will save you dollars in the long run and equip you with more dollars in your pocket over time.

MAKE YOURSELF INDISPENSABLE BY INCREASING YOUR SKILL SET

With increased inflation and now subsequently, increased interest rates, individual consumers and small businesses may start to feel the effects on their pocketbooks. Although we have not officially gone into a recession, many economists see us sliding into one at some point in 2023. To fight both inflation and the increased chance of our wages diminishing, bolstering our overall skill set can be what sets us apart from our peers. Being an astute employee can give you an edge, both professionally and financially. Identifying what it is that your employer needs now and may need in the next one to three years can guide your path to a higher salary.

Are you a mid-level manager and know someone will be retiring soon in a role you aspire to be in? Pick their brain and build a gameplan around what skills you can acquire to make you the best fit for that position.

Are you on track to become an executive director or member of the C-Suite in the upcoming future? Build your leadership base with certificate programs and a solid mix of hard and soft skills to make your promotion a slam dunk for your organization.

RETHINK THOSE LARGE PURCHASES

Not only is it more expensive to buy smaller items like food, but cars and homes are becoming more expensive as well. As homes rose at an unprecedented rate during the pandemic, many buyers got priced out of the market for homes that they once may have been able to afford. Car prices, especially used, increased significantly. Now that inflation is supercharged, these larger purchases are coming down, but still have room to fall. Due to rising interest rates, buyers will likely pay $93,000 more over the life of the loan in order to get what they want.

If you can avoid it, holding off on these purchases may be in your best financial interest. It will ultimately save you more money in the long run if you are able to find something more affordable that suits your needs. The silver lining is that the average rate currently is hovering around 6% and that is the historical average for mortgage rates on the housing market. Being strategic about how, why, and when you purchase new homes and new cars is of the utmost importance. Read more here to assess if you are financially ready for homeownership.

REASSESS YOUR INVESTMENTS

Like many things, the stock market ebbs and flows. Right now, we are in the middle of a serious ebb that officially became a bear market over the last two weeks. Now is a good time to reassess where your dollars and if they should continue to be where you have allocated them. This is based on a number of factors, including your overall time horizon, your risk tolerance, and what your overarching goals are. One key note is that switching in and out of investments routinely is a detriment to your long-term gains and may trigger taxable events if you sell assets before you’ve owned them for a year. Consider staying focused on the big picture and maybe letting go of some of those emotionally charged or impulsive investments you made in 2020 and 2021 that don’t serve you.

Right now, the pain and pinch of summer inflation is being felt in most households that are not super wealthy. This current distress is real and may be difficult to see past. Although our wallets may be hurting, there are practical and useful ways to combat inflation so that we can live to fight another day financially. Hopefully, the above proves useful in your personal money moves so that you can beat and defeat inflation in your home.

By Bryan Mapenzi

Photo by Nattu Adnan on Unsplash

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Created by nationally recognized millennial money expert Tonya Rapley, My Fab Finance is a leading financial education and lifestyle blog for millennials who want to become financially free and do more of what they love.