Handling High Inflation
Slow and steady inflation is an expected part of a healthy financial system, but high inflation means high prices, rising interest rates, and lots of concerns about the best choices for our financial future.
Inflation Refresher—Inflation is the value of currency dropping over time. There are a lot of interesting economic concepts that detail why this happens, but ultimately if inflation happens too suddenly it can put a huge burden on the consumer.
Nobody likes seeing the price of their favorite foods going up, and it’s even worse when the price of everything else goes up along with it. But that's the reality of high inflation. When the dollar is valued less, prices everywhere are going to rise.
What You’ve Saved
Budgets are hit hard during high inflation, especially for those that need to count every dollar in order to get by. If high inflation puts you in a tight financial squeeze, the best way to respond is to take a deep look at your spending and find non-essential, flexible expenses you can cut. Food is essential; coffee out everyday is non-essential, hobbies are flexible, and houses are non-flexible.
You might find things to cut that you won’t even miss, like unused online subscriptions, various fast foods, or forgetting to go to the gym. You might need to cut things you enjoy, like YouTube without ads, unlimited data phone plans, and frequently dining out at restaurants. Every person is unique in what they spend and what is non-essential and flexible.
What You’re Worth
A big problem with high inflation is our expenses get bigger, but our wages don’t. In an ideal world, our wages would automatically increase as the dollar loses value, but the reality is companies are not required to raise wages to match inflation (and often don’t). So we, the consumer, have to bear the burden of higher prices until our economy evens out. Additionally doesn’t hurt to talk to your employer about getting a raise to at least match inflation.
Another option is you can find extra forms of income to increase your budget. This is often harder and takes longer than cutting expenses, but finding extra sources of income can strengthen your budget while making fewer cuts. It could be a good time to consider earning extra money by doing something you’re passionate about on the side.
If you’re looking for additional ways to cope with rising prices, you might explore other ways of making money such as selling old clothes on resale sites, picking up a shift with a ride share app, or pursuing other personal creative projects that can generate income.
While we, as consumers, have little control over when inflation will strike, we can control how we respond to it. High inflation and rising prices are challenging for everyone. However, we at times need to get creative with what we should do to turn those overpriced lemons into reasonably priced lemonade.
Disclaimer:
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