According to a report, the average inflation rate in the US was 3.26% from 1914 to 2022. The lowest inflation rate was -15.80% in June 1921, while the highest was 23.70%, as recorded in June 1920. Currently, the inflation rate stands at 8.3% in the US, as per the US Labor Department. This inflation rate was at 8.5% during the last year and then gradually came down to 8.3%, as mentioned in the US Labor Department report.
Looking at the data from 2012 to 2022, it’s evident that the inflation rate in the US suddenly peaked from 1.4% in 2020 to 7% in 2021 and ended at 8.3% in 2022. The picture tells that the US citizens, similar to the entire globe, are also facing a surge in prices for all necessities.
Surprisingly, the young generation is more into saving than the older generations who believed that they have to work until 65. Despite saving, it’s still not enough to tackle the current inflation rate hike. Here are some tips to help you deal with the inflation rate on your finances and live a peaceful life.
1. Save Money by Negotiating Whenever You Can
You can always try to get a better deal on almost anything to save some bucks. If you shop only from one place, you can ask for a deal or discount on particular items. It’s better to ask than presume the answer will be a no. Whether it’s your gym, grocery store, cell phone plan, or anything that’s negotiable, make sure to ask for plans to save some bills.
2. Always Make a Budget and Stick With It
As per a report, about 80% of people started budgeting in 2021 compared to only 68% in 2019. Budgeting helps you in dividing your expenses and spending accordingly on them. Once you’re clear about how much you can spend on a task, you will save yourself from being left with an empty pocket at the end of the month.
Here are some additional tips that you can follow along with making a budget.
- Don’t keep a lot of cash on you. Try to limit it; otherwise, you might end up spending more.
- Keep your savings and cash account separate, so you can keep track of everything.
- Keep a piggy bank (yes, adults can) and put all the leftover cash in it at the end of the day, so you have little savings in your hands too.
3. It’s Time to Have More Investments than One
To have the purchasing power, you have to diversify your investments when the inflation is rising high. Keep track of your assets and income and identify your risk tolerance to make a plan. A diverse investment portfolio is a mixture of real estate, equities, treasury inflation-protected securities, and so on to beat the inflation.
Francisco Faraco is a CFA charterholder with years of experience in the field. Francisco J. Faraco lives in New York and is currently working as a Teaching Assistant in the Financial Mathematics program at the University of Chicago.
