Inflation is a hidden tax that is applied to everyone’s purchases. It’s a peculiar form of tax in that we don’t see the dollars being taken from us, but the purchasing power of the dollar is eroding. The purpose of this article is to give some guidance as to how we should conduct ourselves while inflation is still at high levels.
Here are 8 practical tips to successful living in an inflationary time:
1. Own your home: Finance your home or condominium with a fixed rate mortgage. We do not recommend floating rate or interest only loans, as these might provide short term premium relief, but they add incremental risk that could cost you later.
2. Keep your vehicle longer: If you have rented a vehicle, you may want to consider purchasing it at the end of the lease. With used car prices still at historically high levels, purchasing your off-lease vehicle might be a great buy. If you already own your vehicle, it is prudent to continue to drive it for another 18-24 months or until prices normalize.
3. Control your budget: Assess where your spending is, and take steps to control it. This is a time to be very intentional about your budget, and make sure that purchases are essential to your family’s well-being. Cancel any subscription services that you don't really need and avoid impulse purchases whenever possible.
4. Limit your energy usage: Increases in energy costs can be mitigated. Raise the thermostat two or three degrees this summer. If 72 is what you normally like, consider moving it to 74 or 75 for a season. Do the reverse in the fall and winter. Be more intentional about taking trips, and reduce the amount of miles that you drive when possible. Working from home can significantly reduce mileage expense.
5. Maximize your employment: If you are still in the workforce, take advantage of a very low unemployment environment. Capable people are in very short supply for most businesses. This can be in your favor to get a meaningful raise, or look for other opportunities or internal promotions.
6. Eliminate credit card debt: Pay off your credit card debt, and don’t allow it to creep back up. If income is steady, you will not be able to maintain all of your current purchases in an environment of rising prices. There is no investment that can come close to the rates credit card companies charge on unpaid balances.
7. Shop smart: Pay attention to your grocery store purchases, and temporary price reductions in the store. If you see a product that you use advertised at a deep discount (think buy one get one free) don’t be afraid to buy several, and put them in the cupboard. Watch for sales on comparable brands, or shop with store brands as an alternative. Retailers may offer online coupons, in addition to those found other places. Consider shopping at a warehouse club such as Costco, Sam’s, and BJs. The quantities are larger than those found in a supermarket, but you will generally save money per product. Gasoline and tires are generally sold at a discount as well
8. Limit dining out: Consider shifting to dining at lower cost restaurants during inflationary times. Also, it is always less expensive to eat at home. Preparing meals from scratch takes more time, but is generally healthier and less expensive than prepared foods.
We hope that you find these suggestions to be helpful. As always, if we can be of service to you and your family, please don’t hesitate to reach out to us.
The commentary is informational in nature and not intended to imply a specific strategy or course of action. Investment advice and recommendations are only provided according to each individual’s personal circumstances. Chancellor Wealth Management is an investment advisor firm registered pursuant to the laws of the state of Georgia. The firm is also registered to conduct business in the states of South Carolina and Texas. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright © 2022 Chancellor Wealth Management, All rights reserved.