In today's fast-paced economy, you might have noticed that your paycheck isn't going as far as it once did. Everything from your morning coffee to your monthly rent seems to be climbing up in price. Recently, U.S. inflation soared to a high not seen in over four decades at 9.1%. This rise in prices, known as inflation, happens when the demand for goods and services outstrips supply, causing the value of your dollar to drop.
How to See Inflation Coming
Monitoring economic indicators such as consumer price index (CPI), producer price index (PPI), and global economic trends can help predict inflation. Staying informed through financial news and updates from central banks will also provide insights into potential inflationary trends, allowing you to adjust your financial strategies accordingly.
10 Steps to Financial Empowerment During Inflation
With inflation reshaping our financial landscape, it's more important than ever to adopt strategies that buffer your finances against these pressures. Here’s a step-by-step guide to not just survive, but thrive during these times.
1. Optimize Your Interest Rates
First things first, check the interest rates on your savings. If they’re being swallowed by inflation, consider switching to a bank that offers rates that can at least compete with inflation. Synchrony Bank, for instance, adjusts its rates to reflect the current economic climate, ensuring your savings grow.
2. Dive Into High Yield Savings Accounts
Instead of spending your hard-earned money, putting it into a high-yield savings account could be a smarter move. These accounts offer higher annual percentage yields (APY) and benefit from compound interest, helping your money grow faster. Use tools like the Synchrony Bank high-yield savings calculator to see how your savings could stack up.
3. Explore Money Market Accounts
Money market accounts give you the best of both worlds: higher interest rates and easy access to your funds. In an inflationary period, these accounts are invaluable for maintaining your purchasing power.
4. Keep Investing in the Stock Market
Despite its ups and downs, the stock market has historically returned about 8% to 10% annually. Keep your investments steady instead of pulling out in a panic. This long-term strategy is crucial for building your wealth over time.
5. Consider Inflation-Proof Bonds
Look into I-bonds and Treasury Inflation-Protected Securities (TIPS). These bonds adjust their payouts based on inflation rates, ensuring your investments keep pace with the cost of living.
6. Secure Your Savings with CDs
Certificates of Deposit (CDs) offer fixed interest rates for a certain term, providing a predictable and safe investment. Synchrony Bank offers various CD options, including ones that let you benefit if interest rates rise.
7. Regularly Update Your Budget
With prices changing, keeping your budget up to date is crucial. Track your spending, cut back on non-essentials, and use budgeting apps to streamline the process. Always be on the lookout for ways to save more.
8. Earn More with Cash Back Credit Cards
Make your everyday spending work for you. Opt for a cash-back credit card like the Synchrony Premier World Mastercard, which offers significant returns on purchases and comes with no annual fee.
9. Build an Emergency Fund
It’s wise to have a financial cushion. Aim to save at least three to six months' worth of expenses to protect yourself from sudden economic shifts.
10. Invest in Your Home
Real estate tends to hold its value even during inflation. If you’re a homeowner, consider making improvements that could increase your property's value. The Synchrony HOME™ Credit Card can help manage these costs effectively.
Embrace Proactive Financial Strategies
While we can't control inflation, we can certainly prepare for it. By adopting these strategies, you're not just surviving; you're setting yourself up to thrive.
Moriah Costa is a personal finance and investing writer. Her work has appeared on Thomson Reuters, S&P Global, The Washington Business Journal, and others.
READ MORE: Easy, Enjoyable Ways to Manage Your Money During Inflation
Need to make a payment?
Use the Log In button to find your account login
portal.