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5 tips for dealing with high inflation

While you can’t control the cost of goods and services, there are a few things you can do to better understand what is happening and to weather this challenging time. Learn more.
Aug 3rd 2022
4 min read
Tips to deal with inflation and high interest rates.

Talk about sticker shock! Browsing the grocery store, pulling into the gas station, or searching for simple household items online can be downright scary lately. Prices have really gone up!

While you can’t control the cost of goods and services, there are a few things you can do to better understand what is happening and to weather this challenging time.

First, what is inflation? “Inflation is the increase in the prices of goods and services over time,” according to the Federal Reserve1. It is important to remember that inflation is the overall increase in the price of goods and services, not just a single item or even several items. A variety of factors are driving inflation, including high demand for consumer goods and low supply related to the pandemic, as well as higher energy prices.

So, what can you do?

  • Stay calm. Think twice before you take drastic actions like moving all investments or cashing out your retirement savings plan (there may never be a good time for that). Keep making good financial choices every day.
  • Increase income if possible. You may want to consider job prospects or ask for a raise.

It is an employee’s market out there. Everywhere you look there are help wanted signs. If you are an employee in good standing, now could be the right time to try to negotiate a higher rate or salary.

You may also want to consider pursuing a career change, as even some entry level positions in high-demand fields are giving new employees signing bonuses and/or higher salaries because of worker shortages.

  • Reduce bills/expenses. Consider reducing some of the “extras” in your monthly expenses. Things like streaming services, cable bills, cell phone plans, and gym memberships may be surprisingly negotiable. Call customer service and ask if you can get a better rate, an introductory rate, or can cut unused items from your bill. You don’t know until you ask!

Consider changing the way you shop. Look into using discount cards at grocery stores or other stores that offer them. Shop for items that are on sale or items that are sold under store brands. You may also be able to hold off on purchasing big ticket items that may come down in price over the long term—like cars or home improvement goods.

  • Pay off debt. With rising inflation comes rising interest rates, meaning the credit card and other debt you have could INCREASE, even if you aren’t actively spending. It is always a good time to think about paying off high-interest debt. If you can’t pay cards off outright, you might want to consider transferring your unpaid balance to a card that offers a zero-interest promotion (usually for six months or one year). That could buy you more time to pay down the debt without paying high interest on the money you owe.
  • Keep planning for the future. Even saving a little every month can really add up in the long run. If you have a traditional savings account, think about moving some of your money into investments that have the potential to grow your money. A financial advisor may be able to help.

Imagine if your family had to deal with high prices, and you weren't there to help provide for them. That’s one reason you may want to consider life insurance to help protect them after you are gone. There are life insurance policies designed for people who don’t have a lot of money left over after paying their bills every month.

There are two major types of life insurance—term life insurance and whole life insurance. They both offer distinct benefits.

Term Life Insurance plans are tailored to your short-term needs and budget. You can select how long the plan lasts—5, 10, 15, or 20 years. This may be the right type of plan to help protect your family while you raise your kids or pay off your home. It's also usually the least expensive type of life insurance.

Whole Life Insurance is designed to last a lifetime, no matter how long you live. While this option may be more expensive than term life up front, if you can fit the coverage into your budget, it could be a sound investment in the future. Also, the price you pay never goes up, even if inflation does. Finally, whole life insurance policies typically build cash value that you can borrow against over time—giving you another method to help prepare for the next financial bump in the road. [1] The Fed - What is inflation and how does the Federal Reserve evaluate changes in the rate of inflation?

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