Photo Credit Allef Vinicius
1. Reassess your spending habits
If inflation is making it difficult to stay within your budget, take a moment to reassess your cash flow and where it’s going. Determine if there are things you can temporarily do without so that you ensure essentials are covered, like housing, groceries, transportation and utilities. For many, this reassessment may result in pressing pause on non-essential expenses like dining out, subscription services or gym memberships.
2. Take on new debt sparingly (and avoid variable rates)
Although the U.S. Fed has kept debt interest rates low during the pandemic to offset inflation, it’s expected rates will rise at some point in 2022. If that happens, variable-rate debts could suddenly cost more.
To hedge against this sudden increase, you might refinance your variable-rate mortgage into a fixed-rate loan or consolidate high-interest credit card debt into a personal loan with predictable payments. And be wary of taking on a lot of new debt in general: even when rates are low or fixed, new debt adds a new monthly payment to your budget and reduces your financial flexibility.
Photo Credit Daniel Thiele