7 Tips for Beating Inflation

By Miranda Marquit

One of the biggest issues right now is inflation. It’s at the highest level it’s been in decades — and that can impact your pocketbook. If you’re looking for ways of beating inflation, you can do a few things.

1. Keep Investing in Stocks

Even though the stock market is a little rocky right now and we could verge a crash, beating inflation long-term requires some stock investments. For your long-term portfolio, don’t leave out the stocks.

While there are some good individual companies you can look for, including those with low capital needs and the ability to raise prices during times of inflation, index funds can also be useful.

2. Look Into I-Bonds and TIPS

While regular corporate bonds might not be the best choice during inflation, some government bonds can be a good choice. I-bonds and TIPS aren’t going to help you with beating inflation, but they can help your money keep pace. With these securities, the yield adjusts with inflation. Combined with a long-term strategy that includes stocks, these items can help your portfolio.

3. Add Extra Diversity to Your Portfolio

A little extra diversity in the form of speculative or more risky assets could help you see returns during times of inflation. Some assets, like real estate and gold, are traditionally seen as hedges against inflation. This can help you add diversity outside stocks and bonds. Additionally, there has been some hype around cryptocurrency. If you have the risk tolerance, adding something with growth potential could aid in beating inflation.

It’s important to check your risk tolerance, though. Some of these assets can be risky or tie up your capital. Some experts suggest that you limit alternative assets to 10% of your portfolio.

4. Re-Evaluate Your Spending

During times of inflation, it can be a good idea to re-think some of how you spend money. With prices going up, you might not be able to stick with some of your expenditures. Cutting back on things that aren’t necessary or re-considering some of your choices can help you save money now — and in the future.

Sometimes beating inflation is about how you prepare for the future or how you prepare to cut back in a time of emergency or recession. Carefully think about what matters to you, and make some decisions about where you can cut back.

5. Look for More Income

In order to keep up with rising prices, sometimes you need to look for more income. Earning more can be a way to secure your financial future. One of the easiest ways to earn more is to ask for a promotion or raise at work. The job market is also pretty tight right now, so you might be able to apply for a different job somewhere else and get higher pay.

Don’t forget about side hustles and starting a business. In some cases, if you have extra time, it can make sense to get involved with a side hustle. The right side business can boost your income and help you handle changes to the economic landscape, including keeping your budget on top of inflation.

6. Pay Down Debt

During times of inflation, interest rates rise. That includes variable interest rates on debt like credit cards and HELOCs. Check to see if you have interest rates that are likely to head higher. If you’re concerned, work on paying down that debt a little bit faster. You can prevent more of your money from going toward that debt, keeping more in your pocket.

During times of inflation, this is essential. The less debt you have, the less you need to worry about what happens during inflation.

7. Stock Up

Finally, don’t forget to stock up on some household staples and non-perishables. If you have room, stocking up during sales on meat and cheese (which you can freeze) and paper products like toilet paper and tissues can help you avoid having to buy as much later.

This only works if you have enough capital to make a large outlay upfront. However, it can be a strategy that works for some people to reduce the impacts of inflation while they employ other strategies like investing and increasing income.

Bottom Line

Beating inflation is likely to take several strategies. As we look at what could be a period of inflation and a potential recession on the horizon, now is the time to look at your budget. Consider what you can do to prepare your finances for the long-term, and how you can make short-term moves today to reduce the impact of what’s next.