How to protect your wallet from spiralling inflation in the face of the cost of living crisis
According to Michael Ashton, managing principal of Enduring Investments, a consulting and investing firm in Morristown, New Jersey, the United States had not seen annual core inflation much above 3% for the better part of 25 years prior to 2021.
Inflation, or the rise in consumer prices, is a slow erosion of your money over time, and it’s starting to bite hard.
The recent increase in the cost of fuel, used vehicles, groceries, and just about everything else is the type of sudden and systemic increase that can jolt most people’s daily spending.
In the United States, inflation reached a national average of 7.5 percent in January, but that is unlikely to be your inflation rate, according to Ashton. In the eurozone, inflation reached 5% in the same month.
According to Ashton, because you may consume different items than the average person and may not live in an average location, your specific rate of inflation will most likely differ from the average.
If possible, shop strategically by purchasing more generic brand items. Use coupons and store loyalty programmes to save money on necessary expenses. For readers in the United States, using membership cards (such as Walmart+ and others) to pay 5 cents (€0.04) less per gallon of gas could help you stay on the road.
Rather than agonising over a single number as a spending power loss to recoup, use the small money moves listed below to gradually improve your financial situation. Here’s how it works:
To begin, reduce discretionary spending, or voluntary spending in categories such as entertainment or travel, by 5%. This is one of those small changes that isn’t too difficult to implement and has a direct impact on your personal bottom line.
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