Table of Contents
- 1 1. Plan and monitor your budget:
- 2 2. Invest in Inflation-protected Assets
- 3 3. Revisit your Debt:
- 4 4. Keep a check on your paycheck:
- 5 5. Know what to stock up before inflation peaks:
- 6 6. Invest in Real Estate:
- 7 7. Adjust your lifestyle:
- 8 8. Invest in yourself:
- 9 9. Be Deliberate:
- 10 10. Learn more about investing in Gold:
- 11 11. Discover new ways for your family to earn money:
- 12 12. Never buy new stuff if you can help it:
- 13 Bottom Line
High Inflation is one of the major problems plaguing the global economy today, it affects every sector, and its impact is hard felt in low and middle-income households.
When there is so much demand and scarce supply of commodities there tends to be a rise in the prices of those commodities. This could be caused by numerous factors, and when the situation worsens it gives room for high Inflation.
Basically, from my previous article that discusses the causes of inflation, I noted that it will be helpful when people know how to prepare their household for high Inflation before they get consumed by it.
Checkout: How to Profit from Inflation
It is important for household members to understand the causes and effects of inflation and as such plan for it, in other to ensure that their assets maintain their purchasing power.
You don’t want to wake up one day and find out that you are side-tracked by the economic winds of inflation, and cannot afford your needs and that of your family.
Here are 12 Tips to get your household prepared for inflation:
1. Plan and monitor your budget:
This is one of the basic things to do. Know what your household needs, plan for it and check out for it.
Pay attention to the changes that happen month to month in the process of running your household. It will actually help in some aspects of your family spending and cut back on others.
With your eyes fixed on the growing prices of things, especially after each month, you need to take a step towards it by checking out the family budget to see if you are living above the inflationary prices.
2. Invest in Inflation-protected Assets
When high Inflation happens, you notice that sometimes dollars become less valuable than yesterday. And if you have inflation-protected investments, your asset value will rise and you will profit from the rising inflation.
Imagine keeping some money you may not need for near-term bills in something like a Treasury Inflation Protected Securities or high-yield savings account that will earn you a modest level of interest.
This interest may not match up with the inflation for this type of account but will offset some of the effects of inflation while keeping your money secured.
3. Revisit your Debt:
You know inflation and higher interest rates sometimes go hand in hand. Consider reviewing debt in your family. Fix everything into either variable rate or fixed rate.
Any debt with a variable rate has the potential to increase your payment in a period of a higher rate. Set out a plan on how to protect against this possibility.
Take for instance, if you have a mortgage with a variable rate you could consider refinancing to a fixed rate. Also, try looking at other debts with a variable interest rate and think about paying down more of the balance each month.
4. Keep a check on your paycheck:
If you are a salary earner, in a period of higher inflation, it is important to pay attention to your salary and other compensation at work.
If your salary stays the same and the cost of everything goes up, you are effectively making less money.
Try to negotiate or push for an increase in your salary that at least reflects the rate of inflation. A 5% pay rise in a year with 20% inflation is not going to cut it, after all, you have a family to look out for.
5. Know what to stock up before inflation peaks:
Since inflation has to do with rising prices, identify what the household mostly needs and stock up especially non+perishable items.
For instance, check up on those items on sale that your household needs and stock them up so you don’t have to pay alarming amounts when there is a crazy surge in price.
During periods of rising inflation, buying large quantities on sale will be an inflation hedge. You don’t want to pay higher for those products you know with proper planning you could have avoided.
6. Invest in Real Estate:
During Inflation, real estate prices usually rise as well. The opportunities for investors of direct level to invest in real estate continues to grow. There are ways you should consider investing in real estate are:
- Real Estate crowdfunding
- Real Estate outright and either renting or fixing and flipping
- * Investing in REITs.
7. Adjust your lifestyle:
As a family you need to deal with the fact that high prices are usually time limited and will revert more realistic level over time hence, you need to adjust your lifestyle once that period comes to be able to beat the standard of living.
Switch to lower-cost substitutes when shopping for necessities like brand groceries, and meat-free meals. Learn to spend less, and stock up on consumable goods when sales are on.
8. Invest in yourself:
This is the choicest way to prepare your household from high Inflation by preparing yourself for an uncertain financial future so when changes happen such as inflation it doesn’t affect the family that much.
Invest in yourself in a way to increase your future earnings. Acquire skills, and startup side hustles to keep the family updated with high Inflation.
Being able to stay on top of a business’s changing needs may not only help to inflation-proof your salary but also recession-proof your family’s financial life.
9. Be Deliberate:
You just have to control what goes out and comes in – salaries, assets, utilities, food e.t.c. when you overlook these things, you are indeed overlooking opportunities that could help your family not go under.
If you are deliberate and disciplined with your spending in your household, the pressure of a higher income becomes little or nothing to you by simply controlling your spending, your household that may be making $70 thousand might thrive during high inflation than a household making six digits.
10. Learn more about investing in Gold:
You can visit local coin shops and get enlightened about purchasing gold or silver. This is one big investment that performs well, historically, during a period of high inflation.
As the dollar loses its value, precious metals, like gold, tend to increase in value. You definitely need help to learn the basics of precious stones or metals because it is easy to make poor decisions in a panic state.
11. Discover new ways for your family to earn money:
Every member of the family should have a way of earning a little extra money. I have written several articles on “side hustle jobs” your family may want to consider.
A side business that involves everyone is even better.
Also, consider how you might create sustainable sources of food and water. Think of gardening, planting fruit-bearing trees. Maybe purchasing land with a natural source of water.
It is very obvious that there is no survival without food and water. Do consider it your top priority.
12. Never buy new stuff if you can help it:
There are places that can offer you everything you need such as craigslist, eBay, free cycle, and other nice places. You’ve got to have a backup plan for every major appliance in your home, if your household electricity bills are becoming unbearable, you could look for other means.
For instance, drying clothes on a clothesline. If restaurant meals are part of your routine, cutting back should be your consideration to save money and eat from home most times.
When you prepare your household for high Inflation, you’ll be enjoying a debt-free lifestyle with investments in stocks, precious stones, real estate, and storing food and supplies to prepare your household for any major financial crisis.
Florence is a personal finance writer, who is passionate about helping others attain financial freedom. She covers topics from side hustles and debt payoff to investment and retirement.