How to Beat Inflation: Tips to Safeguard Your Finances
Welcome Back!
In our daily lives, inflation tends to keep biting into our everyday life and makes it ever so difficult to keep our finances in order. This week's newsletter looks at how you can safeguard your money in these stormy economic times. So let's look how Inflation works:
Inflation is the rate at which the prices for goods and services rise over time. During periods of inflation, the actual buying capacity of your money decreases. Since it is the reality for any one who has to pay for anything, let's look at 4 strategies on how to fight inflation.
Strategy one
Strategy one is to budget accordingly. Draw up a comprehensive budget that outlines your income and expenditure. This can include prioritizing essential expenses, cutting down as much as possible on non-essentials. With that, be sure to find ways to economize. This can look like cooking at home, less coffee and snack runs, and finding bargains and sales while shopping.
Strategy Two
Strategy two is to invest wisely. While this may not be a stage everyone is at, after getting out of debt, investing is a new way to make your money work for you. Consider investing in assets that are sure to appreciate at least as fast as inflation. These include stocks, bonds, and real estate. A step further even would be to consult a financial advisor and draw up an investment plan tailored just for you. But don't feel discouraged if you're not at this stage yet, it all takes time.
Strategy three
Strategy three, is a non-negotiable and that is to build an emergency fund. An emergency fund will be helpful in financial storms, such as job losses and unexpected expenses. A good start is to build a fund sufficient to meet 3 to 6 months of your living expenses. This way when life gets hard, you no longer have to rely on credit cards, accumulating debt. It is always the smartest idea to plan ahead, and prepare for the worst times, so that when Murphy comes, he can't knock out your knees. Within that same thought, always review and adjust your financial plan. Assess and adjust your financial plan regularly, refinancing high-interest debt or negotiate lower interest rates when possible.
Strategy four
Lastly, strategy four is to stay informed. It is key to stay updated on trends in the economy and the ups and downs in the markets. We all know that this can be a confusing and sometimes a rather boring subject. While learning about inflation may not always be the most exciting topic, the consequences of financial ignorance can be significant. Being uninformed about money management can lead to debt, stress, and missed opportunities.
Do you have any questions or concerns about inflation or financial planning? Share with us at mymoneymastery.ca on our contact page!
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