Knowing the keys to dealing with inflation is becoming more relevant day by day. Inflation is at a 40 year high at 9.1% as of June 2022. It is more important than ever to prepare for an even worse inflation and to tighten the belt. It would be scary to deal with rising inflation and a job loss as well.
Inflation is the silent killer of your money. You don’t know it’ s happening until you step up in front of the cash register ready to pay $10 only for the cashier to tell you it now costs $15. Things such as rent, car payments, gas, and food are at record highs.
I am the first to say just how much inflation affected me. I thought 2022 was the year that I was going to spend a lot of money. After all, I worked hard at saving for the past six years, it was high time to enjoy some of my money! Nope. Inflation has made everything worse.
The car accident that I got into earlier this year didn’t help matters, either. I don’t feel like I’m at control of my life anymore. The financial control and empire that I built is now slowly feeling to be deteriorated because of how much inflation affected my life.
Dealing with inflation used to be easy when it was manageable at around 2%. However, it’s become increasingly difficult and much harder as time passes and inflation just gets even worse. You don’t want to be left behind by the end of this fiasco. You want to stay on top of it.
Dealing With Inflation: 9 Ways to Do So
The most wacky way to dealing with inflation is to SMASH that social share button and post to your favorite social media! You’re not the only one feeling the nasty effects of inflation. We’re all in this together and have to be at the forefront of this invisible monster eating away at our finances.
1) Keep Investing Normally If Possible
Some people extended their investing activities. The high inflation caused the stock market of 2022 to start off at its worst return since 1970. That’s not insignificant. It seems millennials experience a “once in a lifetime” event every couple of years. However, now is not the time to panic nor sell.
Now is the time to keep buying and holding. I’m continuously investing into the markets as if nothing is happening. If your budget allows for it, continue to invest normally to stay the course. No matter what, I’m maxing out my 401k, HSA, and Roth IRA. Regardless of inflation, I’m doing so.
I know that it will pay off in the long term. If you can afford to, there’s no reason to lose faith when you get a discount in the stock market. As long as you invested in quality names, long term should be looking good. I do not want to miss out on what’s possibly the best buying opportunity of my lifetime.
This is especially true if you are investing in your 20s. Dealing with inflation means you are continuously staying the course, if you can afford to.
2) Buy Less Stuff
This does not apply to essential expenses. Essential expenses are things you are always going to need, no matter what’s going on. Things like food and water are too essential for you to give up. However, you should be buying less stuff in general. I get it.
The bull market of 2011 – 2021 led you to believe that you deserve to spend some of it!
However, you don’t want to start spending money lavishly before you reach the finish line. You want to start spending money lavishly after you reach the finish line of reaching your financial independence number. I am disappointed that the spending year of 2022 is not going to come to me.
This was the year I was going to start enjoying my money! I worked hard for 6 years, let me reward myself! Alas, this year is not meant to be and I don’t think next year is meant to be either. However, that’s OK with me. I’m fine being patient for long term success.
Dealing with inflation is the most important to me right now.
3) Set Your Priorities Straight
Now’s not the time to live it up. Now is the time to figure out what your priorities are. Yes, we all want to have fun and live the good life. However, you need to recognize when you don’t have the means to enjoy the good life. Some people want to live the good life so much that they live outside of their means.
Figure out your priorities. If your priority is to create long term wealth and to protect and preserve your future, then it’s high time to put that plan into action. Dealing with inflation will have you really figure out what’s important and make you cut out what’s not important.
Every expense of mine went up in the budget this year. Therefore, there’s even less room than what I had before in order to protect my financial health. Be honest with your finances. The one who lies about their finances are the ones who are doing the worst.
Take a good look in the mirror and be honest about your priorities.
4) Keep Looking for Coupons
Deals are still out there. Even though companies are charging record high prices, companies are still offering coupons for consumers. They still need people to buy stuff. I continue to buy at discounted prices and keep my food prices very low and manageable.
I pay probably close to $300/month just for food. That is very reasonable for someone like me. Even with a multi-six figure net worth, I still look for coupons and see where I can save a dollar going forward. I am not above using coupons in order to save money and my financial health.
I know that a dollar saved is not a dollar earned because I’m spending after-tax dollars. Every dollar that you save is closer to $1.20 saved because you’re spending after tax dollars. Many people don’t understand the field they’re playing at.
Dealing with inflation still means to look for coupons and save whenever you can.
5) Increasing 9-5 Income is Key to Dealing with Inflation
Inflation shouldn’t be hitting your salary. When there’s a 9.1% inflation, you should be looking to get a 9.1% increase in salary. The company I was at before offered zero percent salary increases to employees. That was insane.
I haven’t worked for a company before that didn’t raise the salaries of the people until I went into that company.
You need to make sure to keep increasing your 9-5 income by either asking your boss for a raise or going elsewhere where your talents are going to be appreciated. It’s more than possible. The squeaky wheel gets the grease. Speak up. If you don’t ask, you don’t get.
This is the key to dealing with inflation.
Companies made record profits in 2021 and you helped make that happen. It’s time to get a piece of the record profits that companies are making. You deserve it. All of the overtime that you put in for the company shouldn’t be for nothing. You deserve to get something in return.
6) Start a Side Hustle
Now’s the time to start making more money than ever. It’s time to use your talents and skills to good use by having a side hustle. My side hustle of my blog takes up a large majority of my time and it’s one of the best side hustles for me.
It’s time to find a good side hustle for you that lets you make an extra $500 – $1,000/month. AND has the ability to scale as well.
If any side hustles fail, it’s not a bad idea to get a second part time job working on the weekends to make an extra $500/month. Technology has made all sorts of income generating opportunities possible! If you’re not leveraging technology to make a little bit of extra money, you’re not doing good.
Side hustles help so much to dealing with inflation. The best side hustles are ones that lets you *scale* without having to invest more time into making the money. Things like making a YouTube channel or starting a blog are good choices. There are many hours in the weekend.
It’s time to take advantage of it.
7) Plan for a Financial Emergency
People don’t think financial emergencies happen, until they do. Layoffs don’t happen after a couple of months or so. Layoffs happen immediately. It’s that “at-will” employment agreement we signed when we joined the company.
When COVID-19 started, companies laid off employees like there’s no tomorrow and we had record high inflation rates. In a matter of a month.
Financial emergencies happen to you when you least expect it. Someone left a wooden pallet out on the highway that I was on which blew out my tire. That’s $400 down the drain. Wow. $400 that I had to spend because someone did the wrong thing of leaving out a wooden pallet out in the middle of the highway.
That was bad. Financial emergencies will happen, and it would be a shame to happen when you need the money the most. Dealing with inflation means also planning for financial emergencies. I have an extra $15,000 sitting in my bank account just for this purpose.
You just never know how fast you’ll need the money.
8) Prepare to Deal with Inflation for the Long Term
I expect high inflation to last in the long term. It won’t be something that gets solved by next year. It will probably be something that gets solved over the next couple of years. Dealing with inflation and especially high inflation will take time to resolve for people to get relief from.
You don’t want to think that you’re doing fine for 2022 just to be surprised that 2023 is even worse than 2022. States haven’t learned their lesson that giving more money out to citizens causes more inflation. In 2022, there are a dozen+ states who are actually handing out more money to their citizens.
Inflation seems to create a feedback loop where it will just continue to get worse. You don’t want to depend on the government to make decisions that will give you good financial leeway. You want to depend on yourself over the long term. No one is going to come and save you.
9) Keep Calm and Overcome the Fear
It may take 3+ years, but this high inflation will pass. This level of inflation is not just unsustainable, but if this high of inflation stays for a long time, there will be revolts. It’s not just you who’s feeling bad about this inflation. Everyone else is dealing with inflation as well. Everyone else is feeling it.
You’ve overcome much harder things than this. You’ve overcome the COVID-19 March 2020 crash, the almost World War 3s, and many more. You’re more resilient than you give credit for yourself for. It’s time to keep calm and overcome the fear. I would much rather inflation not happen.
It’s not the loss of dollars that I experience with investments that are destroying me. It’s the increase in dollars that I have to give out to businesses due to inflation that is giving me pause, just for me to have a shot at living a decent life.
Food and water is more expensive than ever and I’m tightening the belt more so than ever.
Dealing with Inflation Matters More Than Ever
You don’t want to be unprepared when it comes to dealing with inflation. It’s a black swan event and the situation could ALWAYS worsen. Yes, the situation can always get better but you don’t want to plan your life thinking it’s going to be perfect all the time.
That’s just not going to happen. You want to plan for the future in order to protect yourself. Whatever bad things you think won’t happen will happen. I’m tightening up my belt and building up a good cash reserve base. I’m saving all of my bonuses and I’m saving all of extra paychecks that I get.
July 2022 was a 3 paycheck month. I saved 100% of the extra paycheck and I have no regrets to doing so. Every bonus that I get, I save as well. We are living in a time of crisis and 2022 may just be the beginning. If you prepare for the worst, you will always survive, though you may miss out on gains.
However, if you spend and live as if you’re preparing for the best, there’s a chance that you will go bust. I already built up a good net worth size for my age group that I do not want to risk it by going for gold. I would rather be protected 100% and survive a crisis rather than miss any potential gains.
It all starts with the next enemy in your life that you must defeat, which is by dealing with inflation. Now’s the time to save more, invest more, and spend way less than you were. That way, you have a good life that lasts through the long term, through thick and thin. Your future self will thank you.
Dealing with Inflation: 9 Ways to do so Shortlist:
- Keep investing as normal if possible
- Buy less stuff
- Set your priorities straight
- Keep looking for coupons
- Increasing 9-5 income is key to dealing with inflation
- Start a side hustle
- Plan for a financial emergency
- Prepare to deal with inflation for the long term
- Keep calm and overcome the fear
