Rising Prices
I took my daughter out for lunch this week. It is something that we used to do occasionally but we have not gone for quite some time. For the two of us to have a soup and sandwich lunch, I paid $50. For soup and sandwiches! We are not talking about a refined, tricky soup or nine level sandwich, either; this was tomato soup and grilled cheese! Obviously we know that gas prices are rising but the reality is that most goods and services are rising in price, in some cases dramatically, across the board. Add to that continued supply chain issues and a war and it all spells out the "i" word: inflation, meaning less value for our hard-earned dollars. In February, inflation reached a forty-year high of 7.9% (this means that you dollar is worth 7.9% less on average) and as we head into April, it is headed up, up, up as surely as a bunch of helium balloons. So with many Americans losing ground, what can we do to battle these rising costs? Here are a few tips that may come in handy:
Negotiate Lower Prices On Everyday Items:
The reality is, you can try and negotiate a lower rate on almost anything. Whether it is a cable bill or streaming service, a cell phone plan, a gym membership, or a multitude of other necessities we pay for, almost everything is negotiable. Research shows that customers who ask for a lower rate are almost always successful, so why not ask if there are any programs or discounts you qualify for and see if you can reduce your monthly expenses. Even if coming down in money is not an option, adding in better service may be an option. So for example, if you must pay more for that hotel room, try and negotiate a better view or larger space, so at least you feel you are getting more value for your money.
When You Can, Wait:
Not every price hike is permanent, so when possible, hold off on a large purchase for a while and try to wait it out. Used cars, for example, have become exceedingly difficult to find and often more costly than their newer counterparts. Home improvements is another area where prices have skyrocketed, in part due to supply chain issues and a shortage of materials such as lumber and steel, etc. Obviously if the roof is leaking or the pipes have burst, it will require immediate attention, but if it is something cosmetic, then try and wait it out. It is what I am doing with my old, dingy carpet: trying to remember where that sharp nail is that pokes out, so I can step over it rather than on it.
Diversify Your Investments:
Over a long period of time, it is likely that a properly and well diversified portfolio can provide the return necessary to combat inflation. Work with a qualified investment advisor, such as our experts here at Pacific Financial Advisors, and ensure that your portfolio includes what it needs in order to limit your exposure to financial loss during this difficult economic period.
Make and Monitor a Budget:
This may sound simple but it is effective, as long as it is adhered to. It may be time to prioritize some expenses over others, so if that Starbucks habit has become a drain on your wallet, it may be time to purchase an insulated to-go cup and limit how many times the chain is visited. You probably do not need to dwell on your budget on a daily basis, but it is something to keep track of, as an aid in ensuring that monthly expenses do not climb to a level you are uncomfortable with.
Do Not Be Governed By Fear:
It is easy to become nervous about rising prices and there are people who will prey on that fear. Be careful when you hear or read about so-called solutions that mix talk about inflation with fear, especially when that talk is trying to get you to part with more of your hard-earned money. Always read the fine print and think of the alarm salesman, who comes to your house and tries to scare you to death with stories of horrific crimes that will surely happen to you if you do not immediately purchase their highest-priced protection system. If that is the tactic, tread lightly and consider working with someone else, regardless of the product or service on the table.
Prices rise over time
Remember, prices do rise over time and a moderate increase in prices is normal and good for a healthy economy (as much as we would still like to visit that penny candy store, it would not be good for economic growth). A flourishing economy is good and what we want; out of control inflation is a negative and has the potential to harm most, if not all Americans. Before you buy that horse and buggy and start living by firelight, however, try these tips and come see us and let us help you strategize and come up with the smartest way to protect your money.
If inflation is causing you worry, take a look at the article I posted that shares ten ways to reduce stress. If it is still a problem, consider a night or two at a hotel that specializes in sleep. Yep, it may be time to take a "sleep-cation!" Regardless of whether you like to enjoy your time away awake or asleep, have a wonderful weekend!
Warmly,
Kimberly Wolf and Your Team at Pacific Financial Advisors