You Can Beat Inflation If You Do These 8 Things Now

Are you worried or even struggling right now to stay ahead of the inflation curve and find new ways to make your money stretch further and work better? If you are one of the everyday folks suffering from sticker shock—and I am not talking about cars and houses here (although they are certainly shocking!) but I am talking about groceries and gasoline just to name two—you need these tips on how to beat inflation.

$100 bill on fire representing the need to beat inflation

After two years of the pandemic, getting price pinched in your stomach wasn’t exactly what you were expecting as you tried to get back to a normal life in 2022. So how can you do it and put your money to work to stay ahead of inflation, too? The good news is there are some things you actually can do to protect and even grow your money in an inflationary economy. If you’re not doing these things right now, you are making a big mistake and are likely to suffer financial hardships. Why not start protecting and defending your wallet right now?

How to Beat Inflation

1. Re-think your credit card and how you use it now

Credit card interest rates are going up now and about to go even higher as the Fed lifts interest rates for the first time in years. Experts think these increases will be often and hard on consumers this year because whatever the Fed does will cause credit card rates to rise, too!

So what should you be doing right now to help fight these increases?

There’s one way to avoid real pain when it comes to your credit card and that is to severely limit using it and running up debt on it.

When you do use a card, pay the balance off in total when the bill comes due to avoid any interest. Since the Fed has already started raising rates and will most likely be raising the rates several more times this year to combat inflation, now is the time to start paying down your high-interest credit card debt.

2. If you have multiple credit cards, do this now

Consolidate all your credit card debts into one fixed payment. You can do that with a personal loan. Having a single payment to deal with to pay off credit card debt allows you to plan your payments and know exactly when you’ll be finished paying off your debt. This way, you take control of your finances so your debt doesn’t keep piling up with no clear end in sight.

You can check to see if you pre-qualify without it affecting your credit score in most cases. This method is just one more reason that you should know your credit score and keep it as healthy as possible. If your score falls below 700, start thinking “rebuild” because higher scores get better interest rates and deals when they use it!

3. Convert variable debt into fixed rate debt

If you have variable interest rate debt that is climbing, you can reduce the effects of inflation by switching to a fixed rate on mortgage loans and car loans by refinancing. And, while you are at it, now is a good time to pay down high interest credit card debt and have more of your money going to principal.

4. Get a real grip on your spending habits now!

It really is very simple on this point. Stop spending on the things you don’t really need! Of course you need food and gas every week, but just about everything else you spend on is a choice you make. What you want and what you need are always different and always affect your wallet.

One of the great defenses to beat inflation is not having a lot of wasteful unnecessary spending in your life. This isn’t a new concept just to battle 2022 inflation. It is something touted by many financial advisors for years now and certainly beats inflation, but more importantly, gives you the ability to begin building your future wealth.

To help you with this kind of control, make sure you begin tracking your expenses through some kind of budgeting app or even with a spreadsheet or notebook. This will help you understand how you’re currently spending your money and will help identify problematic spending bursts before they become a bad habit.

5. Review your savings and retirement accounts to protect them now

When inflation strikes and interest rates go up, there is a tiny light off in the distance waiting for you. It comes to you in the form of higher rates of interest on your savings accounts. Now is the time to look for and lock in higher interest rates on your cash accounts, savings, and CDs.

Rates are changing, so it is worth keeping an eye out for these new higher interest rates. One of the best strategies you can do is to take advantage of CD laddering, a series of CDs with strategic maturity dates. Keep watching rates and check any IRA CDs you have, too, so you can adjust these rates when you come to term rollover time and lock in new higher rates on your cash.

6. Start your own business right now?

It just may be possible for you to create some new income that can outpace inflation. It isn’t always easy to increase your income from your current job, but starting a side gig or even having it evolve into a new full time job can mean increasing your overall income. When that happens, wages can actually outshine inflation.

If you have a special interest, a talent or skill, or even a hobby that can translate into a business idea, go for it now. With a little help from the internet, you can gain the advantages of working from home in your off time to get started.

7. Buy these guaranteed-safe investments now

Here are two of the simplest and safest ways for offsetting inflation. Invest in Treasury Inflation Protected Securities (TIPS) which are special bonds that are periodically adjusted to keep pace with inflation. While you probably won’t earn a huge return, your money will be backed by the U.S. government, and your purchasing power will be preserved.

I-Bonds (U.S. Series I savings bonds) are another inflation-protected Treasury investment that can help you beat inflation.

8. Re-evaluate your investment portfolio now

Inflation is a sign of economic instability, so it’s a great time to re-examine and diversify your investments to reduce your risk. If you’re unsure where to start, consider a portfolio with diversification in mind.

If you are invested in the stock market (and you should be), don’t panic now that inflation is here in full strength. Consider balancing your investments into critical areas that will increase in value in an inflationary cycle.

Energy stocks, financial institutions, precious metals, property REITS, and consumer staples are some of the best sectors and stocks when it comes to inflation-adjusted markets.

Don’t bail on your investments; just rebalance the portfolio so you will be in a better position while inflation is ruling the roost. The sooner you do, the better off you will be.

Final Thoughts

No one knows the answer to the big question of when inflation will be under control. If you need any proof that inflation comes and goes for some known and many unknown reasons, simply look at what the Fed has said and done about it over the past year. You will easily see how many signals were missed, ignored, and poorly handled, and that is why we are in the situation that we face today: high inflation and worried consumers.

When economic times are good, your financial habits don’t always indicate your true financial weakness. But when inflation strikes, all your personal habits come under self-scrutiny as money gets tight and you feel the pain. That’s why you need to act now before it’s too late and make some changes to your finances as outlined here.

I suggest one or all of these strategies to beat inflation in your own wallet and then you will be in a much better position when the inflation cycle ends, one day.

How are you handling everyday inflation in your life? Are you being forced to change your lifestyle and are you managing? Or are you fearful that things will continue to worsen and for longer than is being suggested by financial experts like the Fed? What are you doing right now to change your finances and fight inflation?

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