Prof. Stacy, The Money Teacher

Find The Silver Lining To Inflation | Prof. Stacy, The Money Teacher

Find A Silver Lining To Inflation!

All of us are feeling the pain of this high-inflation time but I have been asked many times if there are any ways you can “take advantage” of this period of high inflation? 

I think everyone can agree that absorbing the recent record inflation into your family’s budget is really hard. Between price increases in gas, utilities, housing, groceries, appliances, cars, and nearly everything else, on some days, managing your money can seem hopeless.  

So, are there any “silver linings” to this time of crazy inflation? Can families find any “financial advantages” to help them to reach their financial goals while also living in high-inflation times?  

Frankly, mostly “no” … but I came up with a few ideas that your family may be able to use. But first, you need to make a budget – you knew I was going to say that but, honestly, without a budget, you don’t even know if you have an earning-spending gap or how big that gap is! 

Ways to bring in more cash… 

First, if you have quality things to sell, many families are looking for quality pre-owned cars, pre-owned appliances, and other pre-owned products that are more affordable to purchase – and more available – than “new” items. Most of these “pre-owned” items are selling at record highs, so sellers can reap a financial advantage. 

Second, are you an empty-nester who is living in a house that is “too big” for you? This may be the perfect time to sell your “big house”. You can reap the financial benefits of a robust housing market and downsize to a smaller house. Of course, a smaller house also usually means lower monthly costs, lower maintenance costs, and less lawn to mow – also all good for your budget.  

Third, have you thought about changing jobs to make more money? Since the beginning of the Great Resignation, companies have been desperately seeking quality people and paying more every month to get them. I recently saw $19.00 per hour as the starting rate at Walmart. Now, I’m not saying Walmart is your employer of choice, though it’s fine if it is; my point is that wages have been increasing in the past year and you may be able to take advantage of those increases and raise your family’s income. If you are already working a job you love, you may want to research current salaries for your skills in your market to see if you are being paid market wages. If you are not being paid the market wage, you can use your research to show your manager what the going rate is for your skills and ask for a raise. Workers have a lot of bargaining power right now as employers don’t want to take the time and cost to find a new employee, especially as your research will show your employer that they would have to pay more to replace you anyway!

Fourth, you could work a side-hustle to increase your income. Do you have a hobby or skill that you can use to make some extra money? This could be the perfect time to start your own business on the side! Can you deliver pizzas, groceries, or take-out? Or maybe your current job offers overtime?  

Where to invest in a period of high inflation… 

Are there any “good investments” during this period of high inflation? Especially when the market is so volatile? Probably … and from a surprising direction! Series I U.S. Savings Bonds yields are currently 9.6%. What? U.S. savings bonds – one of the most conservative of investments – is offering a 9.6% annual rate? I want some of that! 

The interest on these bonds adjusts every six months, in May and November based on the Consumer Price Index (CPI), a measure of inflation. So, when inflation goes up, the return on I Bonds goes up as well. 

Of course, there are some restrictions. I Bonds can’t be redeemed for at least one year after their purchase and, if they are redeemed before five years, the individual will be penalized the last three months of interest. Also, individuals are limited to investments in these bonds of $10,000 per year. 

I Bonds were first introduced in 1998, but you probably haven’t heard much about them until now because, until recently, inflation has not been “a thing”, and because these bonds are sold directly from the US treasury – financial advisors have little motivation to suggest them for your portfolio. 

You can check out this investment for yourself at www.treasurydirect.gov to see if it fits into your financial plan. 

Do you know of any other ways to continue to advance your financial goals in these trying times? Put them in the comments and follow me for more ways to manage your money. 

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