How to Beat Inflation

Woman looking at bills. Inflation proof money

Inflation: the current financial buzzword is leading to a lot of speculation and fear. Yet few news outlets or financial institutions are forthcoming with solutions (or at least not ones that make sense—don’t put more money in the markets). So if you want to know what actionable steps you can take, you’ve come to the right place! In fact, these steps are timeless and can help you benefit during any market, inflationary or not.

The Importance of Time

Before we get too deep, let’s be clear: you cannot solve problems of inflation overnight. You must be willing to make moves that take some time, yet have benefits over years or decades. These solutions might seem difficult, and you won’t always get instant gratification, yet you will create more certainty and stability over your lifetime. There’s no magic: you simply have to show up, and do the work.

With some hard work over many years, you can take ownership of your finances and create better outcomes overall. The seeds you plant today may take some time, yet they will blossom. And when those seeds do bloom, you’ll be glad you set them in motion. In fact, planting seeds at any point is better than planting no seeds at all. Everything you choose to do now can serve you on your journey to a more Prosperous future.

Beat Inflation in 5 Steps

1. Invest in Yourself

This step is really about playing the long game. It’s something that you can do at any time, during any stage of your life. You are your greatest asset, after all. The things you can do to sharpen your knowledge, look after your well-being, and learn new skills will continue to benefit you your whole life. Sometimes, the investment is in time, sometimes in money. Yet whatever you can do to continue being your best self is worth it.

So what does that have to do with inflation? Everything! One of the best ways to outpace inflation is to earn more money. Making sure that you can operate at your best, while also adding new skills and services, can ultimately help you to earn more money. The payoff might not be immediate. Yet over time, the more you invest in yourself, your interests, and your knowledge, the more opportunity you’ll find to use those skills.

2. Find What You Love…

…then keep doing it!

When you have a job you hate, it’s hard to keep at it. By pursuing your passions and incorporating them into your work, you create sustainable momentum for your career and your income. And of course, by continuing to work for as long as possible, you make your income last as long as possible. Retirement is where inflation is the most risk to you, because you’re typically living on a fixed income. If things become more expensive, that pool of money shrinks more rapidly. So if you earn an income for as long as possible, you delay that risk for as long as possible, too.

3. Buy Assets with Fixed Payments

Fixed payments are the only things that improve with inflation. What we mean is that if inflation reduces the value of a dollar, then any fixed payments you have will feel like less (and they can’t increase). Everything else around you CAN increase to match the reduced value of a dollar, though. So if you have a $1,000 mortgage now, in 30 years with inflation, it’s going to FEEL like a lot less on your wallet. Especially if prices on everything else have increased.

Buying a house with a fixed mortgage is going to benefit your wallet in the long run (as opposed to rent, which will keep up with inflation and get more expensive). Additionally, whole life insurance premiums are going to feel like a lot less over time too. Those premiums are fixed, so in 30 years it’s not going to feel like you’re paying very much, yet you’re still going to get the benefit of a robust cash value account that earns interest and dividends (plus the death benefit).

4. Be Responsible for Your Mindset

Your mindset is one of the few life variables you have control over. If you let fear and negativity win, you’re going to be in for an unpleasant time. If, however, you work to maintain a positive and peaceful outlook, it’s going to be easier to deal with your problems. We’re not suggesting you ignore issues. We simply recommend cultivating a positive mindset so that you can be more solutions-oriented. Over the course of your lifetime, you’ll be thankful you learned to put out fires with a calm head.

If you allow fear to rule your mindset, you may make rash decisions. And rash decisions often work against your best interests. For example, being fearful of what’s happening in the economy may make you pull all your money out of the market and create a massive taxable event. Or, fear might make you throw all of your money into the market, leaving yourself with little liquidity, and subject to additional volatility. If you’re fearful, one of the best things you can do is acknowledge the fear, then move forward with a calm, clear head. Think about your options, and act from a place of logic.

5. Be Responsible for Your Money

Ultimately, if you want to have a leg up on inflation, you have to take responsibility for your money and your money habits. We all have money habits, yet some can be more detrimental than others. Some can be more beneficial than others. Taking responsibility for your actions, and adjusting them accordingly can be a painful process. Yet ten years out, you’re going to be happy that you adopted more positive habits. (Or, you’ll likely be sorry you didn’t.)

Learn to save before you spend, be mindful of you income and cash flow, and seek to control your fears. These decisions, and more, can help you create money habits your proud of.

Let Us Help You Beat Inflation

If you’re ready to start the journey of inflation-proofing your money, our Prosperity Economics™ Advisors are here to help. We’d be more than happy to connect you with an advisor who can help you create better savings habits with a whole life insurance policy. To be put in touch with a PEM Advisor, please contact us.

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