By: Heidi Rivera MoneyUnder30 featuring Taylor Sutherland, CFP®, CIMA®, AIF®, Senior Wealth Advisor at Halbert Hargrove
This is a sponsored post written by Money Under 30 for Visible
Inflation has been quite the trending topic recently. Over the past few months, the Consumer Price Index (CPI), which is the measure for inflation, rose to levels not seen since 1982.
Everything from food to gas to housing is considerably more expensive — and things aren’t slowing down anytime soon.
In a recent statement, Michelle W. Bowman, member of the Board of Governors of the Federal Reserve System, said that she expects inflation to persist “at least through the first half of 2022.”
She added, “We may see signs of inflation easing in the second half of the year, but there is a substantial risk that high inflation could persist.”
I don’t know about you, but we always like to be prepared for the worst. That’s why we’ve interviewed a line-up of financial experts to come up with ways to stretch our budget during these high inflationary times.
Here’s what they told us.
7 money moves to hedge against rising inflation
Rising inflation may decrease your purchasing power, but that doesn’t mean all is lost. There are a few adjustments you can make to save money and make the most out of every dollar.
1. Rethink your cellphone plan and subscriptions
A recent study by J.D. Power revealed that the average American pays $127.37 a month for their cellphone bill.
If you’re anything like me, chances are you haven’t looked at your contract since the minute you walked out of the store with your new phone.
Amy Maliga, a financial educator at Take Charge America, a national nonprofit financial counseling agency, says that although things like your cellphone bill and subscriptions “might not seem like much, those small expenses can quickly add up.”
She recommends getting in touch with your wireless provider and seeing if you can negotiate a lower rate. If that doesn’t work, look into other options.
For example, Visible, which is owned by Verizon, offers unlimited data, text, and phone calls for as low as $25 per month. Visible’s $40 per month unlimited plan is designed to help you save on expenses without sacrificing service. The key advantage of signing up for Visible’s service plan compared to other discounted cell phone providers such as Cricket (powered by AT&T with unlimited plan rates starting at $55) and Metro (powered by T-Mobile with unlimited plan rates starting at $60) is that Visible is not only the more cost-effective service of the three, but also delivers impressive coverage since it’s powered by Verizon’s powerful network.
The company is also offering three months of wireless service for just $20 a month for switching carriers. You can learn more here, and use code SINGLE to take advantage of this offer.
When it comes to your streaming and gaming subscriptions, Maliga recommends picking your favorites, and putting the rest on hold. You can also share accounts with your parents or friends to save money on these services.
2. Change the way you shop
If your trips to the grocery store are starting to feel more expensive, that’s because they are. According to the Bureau of Labor Statistics, food, in general, has seen one of the starkest increases in pricing this year thanks to inflation.
Taylor Sutherland, senior wealth advisor at Halbert Hargrove, a financial planning firm, says that saving money on these items “is all about changing up the mix. Pay attention to what you’re buying, and don’t be afraid to substitute.”
In other words, if the store brand is cheaper than the name brand, go for the cheaper option instead. This applies to both groceries and over-the-counter products, since those are the items that tend to eat away a big chunk of most people’s budget.
Besides going for the cheaper brand, you should also consider buying things like laundry detergent, toilet paper, canned goods, and other non-perishables in bulk.
“If you know that you will be able to consume the entire set of items, then buying in bulk is a good strategy for combating inflation,” Sutherland says. “ You will be buying at today’s prices, and not tomorrow’s, which will presumably be higher given inflation.”
However, when buying in bulk, Sutherland suggests keeping an eye on the “per unit” price, to ensure you’re getting the better deal, as there may be times in which buying in bulk will cost the same — if not more — than buying individual items.
Lastly, Anthony Martin, founder and CEO of the insurance agency Choice Mutual, says to use store coupons whenever possible, and use your credit card to pay, so you can earn cash-back rewards and maximize your savings.
3. Try a “greener” approach
Gas and energy were the second sectors to experience a serious hike in prices. The national average price per gallon just hit $4.33 — the highest it’s been in all history, according to AAA.
Although these commodities always become more expensive during high inflationary periods, things are probably going to get worse this time around.
As you may or may not recall, Russia is one of the world’s largest energy suppliers. Because of their actions toward Ukraine, economists anticipate Russia will face some serious sanctions in the energy sector, which will cause energy prices to increase more rapidly.
Catherine Valega, CFP, and founder of Green Bee Advisory, a financial planning firm, says that one way to protect your budget against inflation is to rethink your energy use.
“As an environmentalist, I think the high gas prices should make people reconsider their commuting options,” Valega says. “Less cars, more bikes, walks, remote work, etc.”
You can also do some minor adjustments in your house, like swapping regular light bulbs for energy-efficient options, replacing old appliances (if possible) for ENERGY STAR certified ones, and taking advantage of the upcoming warm weather to air dry your laundry, to save even more.
4. Take a hard look at your insurance policies
When was the last time you updated your insurance policies? If it has been more than a year, then it may be time to switch things up.
“People should take some time to compare their policies with alternative providers, or even review their policies in detail to see if all of the coverage is necessary, or if there are potential savings by making a change,” says David Tuyo, CEO of University Credit Union and co-founder of the Advanced Lending Institute.
“At times, you may even be able to contact your insurance provider, and see if they can offer any more affordable policies based on any changes that may have happened since you initially signed up.”
Another way to cut insurance costs is by switching to a higher-deductible plan. Although you’ll pay more out of pocket when submitting a claim, having a higher-deductible plan means you’ll pay less in premiums each month. This, in turn, can help you improve your cash flow.
5. Pay down, consolidate, or refinance high-interest debt
If you have debt, especially credit card debt, now may be the time to concentrate on paying it off since interest rates will only continue to increase with inflation, making your debt more expensive.
Brian Schmehil, senior director of Wealth Management for The Mather Group, a retirement planning firm, says he recommends “opening up a 0% credit card, if you qualify, and transfer the balance to give yourself some time to pay off the debt, while reducing your interest costs.”
Likewise, if you have variable-rate loans, such as private student loans, you should work on refinancing those with a fixed interest rate, to avoid any unpleasant surprises. However, this only makes sense if your credit score and/or income have improved since you took out those loans, as you’ll be able to secure a better rate.
6. Invest more, save less
In times of rising inflation, putting all your extra cash into a savings account, a money market account, or a CD won’t do you any favors.
Why?
Because since their interest rates aren’t keeping up with the rate of inflation, that means you’re basically losing money on all of those accounts.
Christopher Liew, CFA, and creator of Wealth Awesome, a personal finance blog, says that in order to protect your cash against inflation, the best thing you can do is invest a portion of it in things like real estate investment trusts (REITs), in addition to exchange-traded funds (ETFs), which can allow you to earn over 9.5% of interest.
You can also invest your money in treasury inflation-protected securities (TIPS), or series I savings bonds, which are relatively low-risk, and earn interest based on the current inflation rate.
If you’d like to learn more on how to inflation-proof your portfolio, you can read all about it here.
7. Boost your earnings
Schmehil, from The Mather Group, says that if you can’t minimize the effects of inflation on your expenses, the best thing you can do is concentrate on increasing your net worth.
“The labor market is tight, so ask for a raise if you feel you’re deserving,” Schmehil says. “If that doesn’t work, you may want to switch jobs since employers are paying a premium.”
And he has a very good point, too. A recent survey by the Pew Research Center revealed that most of those who quit their jobs last year said it was “somewhat easy” for them to land their current position, while more than half said that they’re now earning more.
So, if you’ve been thinking about improving your career prospects, now may be the time to do so.
Besides switching jobs, Schmehil also recommends starting a side hustle to bring in some extra cash. If that’s something you’d like to explore, here are some ideas to help you get started.
Summary
Protecting your finances against inflation is all about getting crafty and identifying opportunities to cut down costs. Even subtle changes like lowering your cellular phone bill by switching to a discounted wireless provider like Visible to moving debt from a high-interest credit card to a new card with a 0% introductory balance transfer offer, these actions make a difference in combating inflation. While it may not seem like much, trust us, small changes in your spending can really go a long way — even if inflation isn’t part of the equation.
