A young person’s guide to managing inflation

5 tips from trusted financial advisors

ByTracey Anne Duncan
Updated: 
Originally Published: 
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You may have been hearing money experts talk about inflation lately. In kindergarten terms, rising inflation means the price of life is about to go up. Here’s what you can do to deal with it, according to financial advisors.

1. Make a budget and commit.

Doing the difficult work of planning before you start spending will save you hundreds of dollars, Sharp says. Not only that, but recent research suggests that milennials who spend less and save more are happier, so sticking to a budget might also positively impact your emotional health.

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The true secret is to set your budget on how much you want to spend and force yourself to stay under it by planning and being intentional.

Krystal Sharp, a money coach in Orlando

2. Buy what you know you need ASAP.

The cost of goods has started going up, but inflation means that prices will continue to rise. That means that once you have a budget and know what you need, you should try to buy it before it costs even more.

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3. Make sure your income keeps up with inflation.

If you can’t negotiate a pay increase with your current employer, it may be time to start looking for a new one or get to work on a side hustle.

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Did you get a 6.8% increase this year? If not, you are effectively being paid less than you made last year.

Jay Zigmont, a financial planner in Mississippi

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Basically, inflation means that you are paying about 6% more for everything than you did last year, which means that it’s going to cost more to get the things you need. In order to make up for that reality, you either need to make more or you need to spend less.

4. Put your money in the right places.

The money you have in any account that makes less than 6% interest is actually losing money right now, Zigmont explains. “It is no longer a great time to keep a significant amount of savings in the bank. Now is the time to be using that cash to pay down debts, invest in assets that offer greater than 6% return, and buy things that you know you need before they have a chance to keep going up in price.”

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Avoid loading up credit cards because when interest rates go up banks start charging more interest on the credit cards and on unsecured loans meaning you will have to pay more money if you have more balance on your credit cards.

Sankar Sharma, a London-based financial advisor

5. Deal with your debt.

When your spending habits haven’t caught up with the reality of inflation, it’s easy to try to maintain your standard of living by creating debt or not dealing with the debt you already have. Don’t do it.

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