Does your wallet feel a bit thin these days? In recent months, it has been difficult to ignore the effects of inflation. The prices of the goods and services we depend on, such as gas, groceries and utilities, have risen sharply, straining our finances.
According to Thrivent’s 2022 Consumer Financial Outlook Survey*, 63% of respondents said inflation was to blame for being financially deranged. In fact, more than three-quarters of respondents (76%) said inflation/cost increases are having a negative impact on their savings, putting them in a more vulnerable position. Only a small percentage of respondents – 28% – said they currently save more than enough or a good amount.
Conducted in partnership with data intelligence firm Morning Consult, the survey surveyed 2,221 adults across the country between May 9 and 17.
While you may be concerned about how the current financial situation will affect your finances, there are ways you can take control of – and possibly even improve – your financial situation. Here are some actionable tips from Thrivent to get back on track financially and hedge against inflation:
1. Sort Emotions – Money decisions can evoke strong emotions. It’s normal to feel anxious, stressed, or even anxious.
We recommend bringing emotions to the table first by asking: What is on my mind most? When people recognize their emotions and their worries, it can lessen the ultimate impact. Second, ask yourself: what is in my control? For example, while you can’t control market volatility, you can take steps to balance your asset mix to match your risk tolerance.
2. Go back to basics – It’s a good idea to revisit your budget in response to significant changes in household income or expenditure. With inflation driving prices up, now is a good time to take control of your spending and overall financial picture.
First, outline how much money is coming in each month. Second, determine where that money is going: How much is going into your savings, bills, and everyday expenses?
This exercise can be done in many different ways – with pen and paper, a spreadsheet or a mobile app or digital tool. The important thing is to start. These initial insights can help you make more informed decisions about your money.
3. Find a Support System – It’s important to remember that you don’t have to do this alone. Having someone you trust to talk to about your finances can help you wrestle with your emotions, discover your behavior patterns, find a clear path forward, and stay accountable to a strategy.
Start exploring your options. A financial advisor can be a sounding board for changing or competing financial goals. They can pick you up where you are today – whether you are starting from scratch or developing more advanced financial strategies.
If you’re not ready to take that step yet, there are plenty of free resources to help you get organized, like Thrivent’s Money Canvas coaching program. Money Canvas offers free online coaching sessions to help people gain a basic understanding of their financial situation and establish healthy daily budgeting, saving and spending habits.
4. Strengthen Financial Foundation – There are some first steps you can consider to strengthen your financial foundation in the short-term, including:
• Change your budget – as higher prices drive up spending, reassess your budget and compromise on spending to continue living within your means. Depending on what your priorities are, you can find ways to cut back, such as: B. shopping smarter at the grocery store or eliminating recurring subscriptions. Finding a way to save even $25-$50 a week will free up an additional $100-$200 a month that can be used for other purposes.
• Establish an Emergency Fund – The survey found that more than half of Americans (60%) would be concerned if faced with an unexpected $500 expense. This is a good reminder that now is not the time to lose track of your emergency savings.
The general rule of thumb is to save enough to cover three to six months of expenses. Due to inflation, you should consider increasing the amount you put away on each paycheck. Having extra reserves available can give you more confidence and help you get through the higher prices we are experiencing right now.
• Dealing with Debt – Dealing with debt on top of inflation can put even more strain on your finances. For those with debt, develop a strategy to address it. Depending on the amount, remember to prioritize smaller debts first and then work your way up to the largest amount. Or focus on paying off the debt with the highest interest rate first. Consolidating your debt can be a third option.
5. Rethink Investing – To minimize the long-term impact of inflation on wealth growth, now may be an ideal time to rethink your risk tolerance and compare it to your asset allocation. If necessary, a financial advisor can help you diversify your portfolio to better suit your current risk appetite, investment goals and time horizon.
6. Practice Smart Behaviors to Improve Financial Health — While many Americans recognize the behaviors that can improve financial well-being, the survey found current pressures may be preventing them from doing so. For example, 77% of respondents said automating savings is very or somewhat effective, but only 41% currently do so. For many, this may be a missed opportunity that need not be. If you can “set and forget” it’s an easier way to make meaningful savings over a number of years.
Practicing other intelligent behaviors, such as B. Living within your means, sticking to a budget, and sticking to a financial strategy can also put you on a better financial footing.
While the effects of inflation can feel overwhelming, don’t let it throw your finances off course. By seeking help, focusing on your financial strategy, and sticking to your goals, you can navigate this period successfully—and emerge even stronger financially to face whatever tomorrow brings.
This article was created by Thrivent for use by Robert Kopp of Newberry County, SC. He is based at 1108 Harrington Street in Newberry and can also be reached at 803.768-4696.
About Trivent
Thrivent is a diversified financial services company that helps people achieve financial clarity and enable lives of meaning and gratitude. Serving more than 2.3 million customers, Thrivent and its subsidiaries and affiliates provide advisory, insurance, investment, banking and generosity products and programs nationwide by phone, online, and through financial professionals and independent agents. Thrivent is a Fortune 500 company with $189 billion in assets under management as of 12/31/21. Thrivent has an A++ (Superior) rating from AM Best, a rating agency; This is the highest of the agency’s 13 rating categories and was confirmed in June 2022. The rating is based on Thrivent’s financial strength and ability to pay claims. Does not apply to the performance of investment products. Visit Thrivent.com for more information. You can also find us on Facebook and Twitter.
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About Morning Consult
Morning Consult is a global decision intelligence company transforming how modern leaders make smarter, faster, and better decisions. The company combines its proprietary high-frequency data with applied artificial intelligence to make more informed decisions about what people will think and how they will act. Visit morningconsult.com for more information.
*Methodology
This general population research was conducted in partnership with data reconnaissance firm Morning Consult and surveyed 2,221 adults across the country between May 9 and 17, 2022. Interviews were conducted online and data were weighted to obtain an approximate target sample of nationally representative adults by age, sex, race, income, geography. The full survey results have an error margin of +/- 2 percentage points.
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The article was created by Thrivent for use by Robert Kopp. He can be reached at 803.260-1620.
