How Our Family Fights Inflation

Millennials typically spend more than other generations on certain expenses that have been increasing most rapidly. Here are some tips to cut your losses.

Young couple in kitchen with laptop and credit card
(Image credit: Getty Images)

Whether you’re 28 or 68, you’re staring down a surge in consumer prices. But for many millennials, the precipitous rise in inflation—which reached an overall rate of 8.5% in March—has been especially steep.

Consumers ages 35 to 44 recently experienced inflation at a higher rate than other age groups, with those who are 25 to 34 close behind them, according to a Wells Fargo study. Millennials typically dedicate a greater share of their spending than other generations to certain expenses that have been increasing most rapidly, such as rent and home purchases, used cars, and gas. Your grocery bills are likely getting bigger, too—especially if you’re feeding a growing family.

Tweak Your Budget

I asked several financial advisers how millennials can mitigate inflation’s effects, and many of them brought up the basics of budgeting. Take a close look at your spending habits to see where you can shrink some bloat.

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To save gas, my husband and I swapped cars. He’s making his half-hour commute in my fuel-efficient sedan. I work from home and shuttle our kids to day care a few minutes down the road in his less-efficient SUV. Before I buy groceries, I check my supermarket’s weekly flier for deals. Shopping at discount grocers, buying items in bulk, searching for coupons, joining store or gas-station loyalty programs, and charging purchases to a rewards credit card that offers rebates on everyday spending (for our picks, see The Best Rewards Cards for You) are other ways to counteract price increases on essential expenses.

Trimming nonessential spending may produce bigger savings—and it doesn’t mean sacrificing everything that you enjoy. “You don’t need to start cutting lattes if you really love your daily coffee ritual, but you do need to recognize what isn’t high priority for you,” says Eric Roberge, a certified financial planner and founder of wealth-management firm Beyond Your Hammock. If you have a pricey gym membership or pay for video-streaming services that you’ll use less during the summer months, consider putting them on pause.

Keep an Eye on the Future

Don’t overlook the budget components of paying off debt and saving. Especially as the Federal Reserve raises short-term interest rates in an effort to rein in inflation, focus on paying down credit cards and other high-interest debts.

If you have access to a 401(k), contribute at least enough money to capture any employer match. Stocks tend to beat inflation over time, so make sure they are adequately represented in your portfolio. Melinda Satterlee, a financial adviser and owner of Marathon Wealth Management, recommends that millennials allocate at least 70% of 401(k) or IRA contributions to stocks and the rest to short-term corporate bond funds.

Finally, take a deep breath. Most millennials weren’t born the last time inflation was this high, and living through it for the first time as an adult is unsettling. “What we’re seeing today may last a year or two,” says Andrew Crowell, vice chairman of wealth management for D.A. Davidson. “It doesn’t mean prices are going to rise 7% a year the rest of our lives.”

Lisa Gerstner
Contributing Editor, Kiplinger's Personal Finance

Lisa has spent 15 years with Kiplinger’s Personal Finance and heads up the magazine’s annual rankings of the best banks, best rewards credit cards, and financial-services firms with the best customer service. She reports on a variety of other topics, too, from retirement to health care to money concerns for millennials. She has shared her expertise as a guest on the Today Show, CNN, Fox, NPR, Cheddar and many other media outlets around the nation. Lisa graduated from Ball State University and received the school’s “Graduate of the Last Decade” award in 2014. A military spouse, she has moved around the U.S. and currently lives in the Philadelphia area with her husband and two sons.