As inflation continues to increase as each new monthly report comes out and many Americans continue to struggle, it’s more important than ever to have good financial habits and discipline to get through challenging times. As energy costs, food costs, real estate and other essentials continue to soar, we wanted to provide tips on how to manage your finances and savings to put yourself in the best possible position.
The May 2022 Inflation Report Numbers Explained
On June 15, 2022, the Federal Reserve raised its interest rate by three-quarters of a percentage point. This move, the latest in a series of rate hikes, is an attempt to cool down the economy and stave off future inflation. With higher interest rates, businesses will be less likely to borrow money to expand.
In addition, consumers will have difficulty borrowing money to buy homes, cars, and other big-ticket items. Reduction in demand should lead to lower prices in circumstances where demand is driving inflation.
The high inflation indicated in the May 2022 report, an over 8.6% increase in the Consumer Price Index, brings back unpleasant memories of 1970s stagflation. Inflation, coupled with the drop in stock prices, leaves many people in a greater need for cash at a moment when their investments have less value.
Investors looking to invest in alternative investments such as cryptocurrency have also seen their portfolios lose a substantial amount.
Financial Management Tips During Times of Inflation
Despite these setbacks, it’s best to be proactive and do all that you can to stay in good financial shape throughout challenging times. Changes in investment and spending behavior can help people keep their portfolios afloat while staying within their budget.
It can seem overwhelming, with inflation cutting into the value of cash savings, the stock market continuing to drop in 2022, real estate prices skyrocketing, and the interest rates still relatively low on fixed income, it’s difficult to know the best ways to invest your money.
At ARQ Wealth, we leverage our decades of experience to know the best ways to handle challenging financial times. The number one tip that we’d recommend would be speaking to professional financial and retirement planners such as those at our firm. We currently are offering a no-cost no-obligation financial planning session. This way we can sit down with you and your family and create a unique plan for your unique situation.
In addition to sitting down with a financial professional, here are some other tips that can greatly help during challenging economic times:
Max Out Retirement Accounts
Look into your company’s options for retirement accounts such as 401(k)s to see if you can contribute more, as firms often match a certain percentage that is money that comes out of their pocket. If you are in the beginning or the middle of your career, this can be especially useful as you have compounding interest and time on your side to accumulate more wealth.
Create a Budget
Tracking your expenses and creating a budget is a proactive way to get control of your current finances. Oftentimes, many individuals just look at the final bills at the end of the month and don’t look to ways to consolidate their spending on non-essentials. Review your last few months of credit card bills and categorize each type of spending to identify ways to cut back on wasteful purchases.
Review Current Investments to Get a Comprehensive Picture
With how often economic conditions change and rules/regulations depending on the state or even city that you live in, it’s key to always be constantly reviewing your current investments to see if there’s any opportunities to make some adjustments. You can sit down with one of our financial and retirement specialists now to learn more about what those opportunities may be to diversify more of your investing strategies.
Get Your Free Financial Plan Now
With our no-cost no-obligation financial planning session, we’ve provided people just like yourself with the peace of mind that they deserve despite the troubling inflation and economic reports that have been coming out lately. Call (480)-214-9572 now to get started or click the link here to visit our website.
