Never Miss a Freedom Insurance Financial Post

Subscribe to our newsletter to get the latest in insurance & financial news

preparing for inflation

Is your money worth as much as you think it is? Inflation, the rate of rising prices for things like goods, services, and the cost of living, may make your money less valuable in the future.

Because inflation can affect the worth of your money in the future, it is important that you start preparing for inflation now. 

Do you want to learn how you can prepare for inflation on groceries, services, and other necessities? Keep reading these top seven financial tips to help you prepare for your future.

1. Eliminate & Stay Out of Debt

One of the most important tips for your inflation preparation strategy is to eliminate and stay out of debt. While you may have to make sacrifices to your finances to pay off credit cards, student loans, and other debt payments, it will save you money in the long run. 

As time goes by, you may find that the interest rates for your loans go up and you will owe more money than you borrowed. When you pay off your debt as quickly as possible, you will have more financial freedom.

If you need help finding ways to save money and pay off your debt, meeting with a financial planner can help you meet these goals.  

2. Stock up on Food Storage

Next, you need to prepare for inflation on groceries. Food prices continue to rise each year, and even sticking to your budget will not prepare you for this inflation. In fact, food inflation increased by 4.6% in 2021

While prices for food normally increase, other events like the COVID-19 pandemic may increase these prices even more. By stocking up on non-perishable food items and water, you can prepare for these rising prices. 

Before food prices rise even more, you can purchase a large food supply for your home. In general, it is recommended that you store a year’s supply of food for your entire household. 

For water storage, you should plan to have a gallon of water per day for your stockpile. 

3. Buy Instead of Rent

Next, you should consider making real estate investments as soon as possible. Similar to rising food prices, interest rates for real estate fluctuate over time. When you rent a home, you need to be prepared to pay increased rent each year. 

The biggest benefit of buying a home instead of renting is that it allows you to lock in a lower interest rate and monthly payment. This is what protects real estate investments from inflation, as it is a hard asset. 

Not only will you avoid inflation with a real estate investment, but your property may even appreciate in value, giving you better returns on your investment. 

4. Try New Investments

To protect yourself from inflation, it is also important to invest in hard assets. These are assets that will benefit from the rising prices due to inflation. Some hard assets include precious metals, like gold, silver, and platinum. 

Others include real estate investments and other commodities that act as inflation hedges. 

5. Keep Investing

Another important tip to follow is to keep investing, even if the economy does not seem promising. If you are worried about the state of the stock market and you pull your investments, you will likely lose a lot of your money. 

History shows that the longer you leave your money invested, the more returns you can expect. Still, when inflation increases and the value of your stocks or other investments decrease, you may worry about your investments. 

However, the stock prices will eventually increase again. Leaving your money invested will make you more money in the long run.

6. Build Up an Emergency Fund

Something else that can protect you from rising costs from inflation is building up an emergency fund. Once you have eliminated all of your debt, having an emergency fund will help you stay out of debt and pay for any unforeseen costs. 

This is especially important if you live from paycheck to paycheck. If you have no extra money to pay for unexpected costs, inflation and rising costs may put you back in debt. 

Typically, it is best to save three to six months of your living expenses. However, even by saving an extra $100 dollars, you will find that you can absorb the cost of inflation in your daily life. 

7. Stay Frugal

Finally, you can protect yourself and your family from inflation by staying frugal. When you make your monthly or yearly budget, there are two parts you need to consider: the money that you make and the money that you spend. 

Even when you do not make a high salary, you can save your money and essentially increase your income by living a thrifty life. This is achieved by controlling your spending and being very deliberate about the things that you spend your m money on. 

By becoming more disciplined with your spending habits, you can enjoy larger savings that will help you prepare for inflation. 

Get Help Preparing for Inflation With Financial Planning

Because inflation lowers the value of your money, it can cause financial stress and uncertainty. Following these tips will help you protect yourself from inflation and grow your finances. 

Something else that can help you prepare financially for life events, like retirement and education costs, is meeting with a financial planner. They can help you reach your financial goals and prepare for unforeseen circumstances. 

If you are looking for a financial planner, Freedom Insurance Financial can help! Contact our team today to start mapping out your future with our financial planning experts. 

You may also like