Since the pandemic, inflation has stretched Americans' dollars thin. Inflation has risen nearly 23% since January 2021, according to the Bureau of Labor Statistics.
Wages, on the other hand, haven't quite kept up, rising by 21.5%.
While several interest rate adjustments and policies, such as the Inflation Reduction Act or the One Big Beautiful Bill, have been made to help curb inflation, Americans' concerns are growing.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The University of Michigan's Consumer Sentiment Survey showed year-ahead inflation expectations among Americans grew to 4.8% in August, up from 4.5% in July.
The headline Consumer Sentiment Index came in at 58.2 for the month, down more than 5% from July and more than 14% from a year ago.
Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.
As Americans continue to grapple with prices that are rising faster than wages and dwindling confidence in the economy, it's crucial to have a plan in place to help bridge the gap and build long-term financial stability.
It all starts with a budget
You've likely heard the importance of having a budget. However, very few people actually know where every dollar goes. Once you know where your money is going, you can determine the best use for each dollar.
Start by listing essential expenses, such as groceries, rent/mortgage payments and debt. Then, identify and trim back unnecessary spending, such as dining out and subscription services.
Your budget can also be used to achieve savings goals and debt repayment, even during periods of inflation. Carving out money for emergency savings or high-interest debt payments will help ensure you're saving or paying off debt at a rate you can actually afford.
This will help you feel more in control during a time when it feels like so much is out of your control.
Look to boost your income
If you build your budget and realize you need additional income, or want to boost your savings, look for opportunities to stretch your income. The gig economy is booming right now with services like Uber, DoorDash and Instacart.
Typically, these jobs are very flexible, allowing you to work as much or as little as you'd like. Even an extra $100 to $200 can help offset price increases or provide a nice contribution to your savings account.
You can also look for ways to maximize your current employer's benefits. Some companies offer commuter stipends, wellness reimbursements or education credits that can reduce out-of-pocket costs.
If you're struggling financially, don't be afraid to have a conversation with your employer. See what benefits you may qualify for, or consider asking for a raise.
If your company offers health savings accounts or flexible spending accounts, take advantage of those, too. Take this time to review your tax withholdings and adjust them, if needed, to ensure you're not giving the government an interest-free loan.
Put a lid on your expenses
During periods of inflation, you also want to be strategic in how you manage your expenses. When it comes to recurring bills, including internet, insurance premiums, phone service or other utilities, call providers for discounts.
Looking for expert tips to grow and preserve your wealth? Sign up for Adviser Intel (formerly known as Building Wealth), our free, twice-weekly newsletter.
After explaining your situation, you might find there are loyalty programs you're eligible for, or you may be able to negotiate a lower rate. Even a small reduction adds up.
Grocery costs have also become a burden for families. To cut costs, consider batch cooking, swapping name brands for generics or growing some of your own produce.
It's also important to prioritize paying off your debt. Consider utilizing the avalanche or snowball methods to pay off debt. The sooner it's paid off, the more money you'll have to allocate elsewhere.
Be ready for an emergency
It's also important to protect your purchasing power. Building an emergency fund, like mentioned above, can help provide a cushion for unexpected costs and prevent you from charging up your credit card.
If you have savings, consider putting some of those funds into a high-yield savings account or investing it to maximize those dollars.
Living through financial challenges can be extremely stressful, especially when it feels like so much is out of your control.
However, finding ways to earn more money, cut spending and grow your savings are the best lines of defense.
Taking these steps to build financial stability will help you become more resilient to economic challenges.
Brad Clark is an investment advisory representative of and provides advisory services through CoreCap Advisors, LLC. Solomon Financial and CoreCap Advisors are separate and unaffiliated entities.
Related Content
- Stick to the Plan: Don't Panic During Economic Uncertainty
- Household Budget Worksheet
- Are Rideshare Drivers on the Road to Financial Ruin?
- Should You Ask for a Raise? How to Tell When It's Time
- Extra Cash? Should You Pay Off Debt or Invest?
-
Stocks Hit Fresh Highs Ahead of the Fed As Earnings Pump Optimism: Stock Market TodaySHW and UNH were two of the best Dow Jones stocks Tuesday, thanks to solid earnings reports, and MSFT closed with a $4 trillion market cap.
-
Selling Your Haunted House? What You Have to Tell Buyers (and What You Don’t)You don’t need ghosts to spook buyers, sometimes a home’s past is enough. Here’s what sellers should know about disclosure laws, pricing and perception when a property has a haunted history.
-
Stocks Hit Fresh Highs Ahead of the Fed As Earnings Pump Optimism: Stock Market Today
SHW and UNH were two of the best Dow Jones stocks Tuesday, thanks to solid earnings reports, and MSFT closed with a $4 trillion market cap.
-
CMS Brings Back Furloughed Staff for Medicare Open Enrollment LifelineThe government has recalled approximately 3,000 workers to assist with Medicare and ACA Marketplace Open Enrollment.
-
Targa Resources, Take-Two Interactive, Boston Scientific: Why Experts Rate These Stocks at Strong BuyWall Street is highly bullish on these three high-quality stocks.
-
Debunking Three Myths About Defined Outcome ETFs (aka Buffered ETFs)Defined outcome ETFs offer a middle ground between traditional equity and fixed-income investments, helping provide downside protection and upside participation.
-
This Is Why Judge Judy Says Details Are Important in Contracts: This Contract Had HolesA couple's disastrous experience with reclaimed wood flooring led to safety hazards and a lesson in the critical importance of detailed contracts.
-
US-China Trade Hopes Send Stocks to New Highs: Stock Market TodayApple and Microsoft are on track to join Nvidia in the $4 trillion market cap club.
-
A Lesson From the School of Rock (and a Financial Adviser) as the Markets Go Around and AroundIt's hard to hold your nerve during a downturn, but next time the markets take a tumble, remember this quick rock 'n' roll tutorial and aim to stay invested.
-
I'm a Financial Pro: This Is How You Can Guide Your Heirs Through the Great Wealth TransferFocus on creating a clear estate plan, communicating your wishes early to avoid family conflict, leaving an ethical will with your values and wisdom and preparing them practically and emotionally.
