Inflation has risen rapidly, but Mr. Money Mustache has a few tips for dealing with it.
Most important points
- Financial blogger Pete Adney tells his readers not to panic about inflation.
- He believes that the big picture will sort itself out and that making a few changes can help alleviate financial stress.
Inflation has been a concern for almost everyone this year, and there is no sign of inflation slowing down. According to the most recent figures, inflation is up 9.1%, the largest increase in more than 40 years.
Pete Adney, the man behind the popular Mr Money Mustache financial blog, says the first rule for dealing with inflation is don’t panic. While inflation is extremely high right now, the global economy will adjust over time.
However, it probably won’t be a quick process. If you’re stressed about inflation and want to make immediate changes, there are three things Adney recommends.
1. Don’t look at prices, look at relative prices
Adney’s first tip is to change how you look at the prices of what you buy. It is normal to only look at the price itself and how much it rises. When milk goes from $4.50 a gallon to $4.75, your instinctive response is that it now costs you more.
What really matters is how much things cost relative to your income. If the milk price rises by 5% this year, but your income rises by 10%, you will still make it.
This does require that your income rises enough to keep up with inflation, or rather more. If not, Adney says it’s time to negotiate a pay rise and start looking for new jobs.
It may take some time to increase your income. Fortunately, the following two tips from Adney describe how you can adjust your lifestyle to lower your own personal inflation.
2. Make replacements to save costs
When people worry about inflation, it’s often a few specific expenses that hit their bank account harder than usual. Gas is the most notable example of late, but you probably notice other bills that cost you more than usual.
Adney suggests looking for substitutions you can make to move away from things with rising prices. If your gas bill continues to climb, see if there are more activities you can do within walking distance. Try carpooling to work. You can also look for an electric car.
Changes like these can at least offset the impact of inflation, and you can also find ways to improve your quality of life.
3. Postpone Big Expenses
Certain industries have experienced significant price spikes in recent years. If possible, try to delay major spending in areas where prices have risen. Prices will eventually return to normal, so if it’s not urgent, you can save money by waiting.
Adney tells how he postponed some woodworking projects due to high wood prices in 2021, which started to decline again this summer. We see a similar trend in housing, where prices skyrocketed and are now cooling. Car prices are a more current example, with consumers paying much more than usual for new and used vehicles.
With large purchases like this, patience is the best approach. Unless it’s something you absolutely need, waiting for prices to come back to the market can help you avoid paying too much.
It’s easy to worry about inflation, especially with all the negative headlines about it. Adney gives great advice on dealing with inflation, both on how to deal with financial stress and your budget.
Warning: The Highest Cash Back Card We’ve Seen Now Has 0% Intro APR Until Nearly 2024
Using the wrong credit or debit card can cost you a lot of money. Our expert loves this top pick, which has an intro APR of 0% until almost 2024, an insane cashback rate of up to 5%, all somehow with no annual fee.
In fact, this card is so good that our expert even uses it personally. Click here to read our full review for free and sign up in just 2 minutes.
Read our free review