If you’ve purchased gas, groceries, a car, a home, or just about anything else lately, you’ve noticed that things are getting more expensive, quickly. In March, inflation reached 8.5%, representing the biggest year-over-year jump in over 4 decades.
Inflation is typically the result of an imbalance in supply or demand. What makes this period of inflation somewhat unique, however, is that the economy is experiencing pressure from both sides, explains Lindsey Bell, the chief markets and money strategist for Ally Financial.
“On the supply side, obviously COVID was the leading driver, where there were significant bottlenecks in supply chains, and a slowdown in production and shipping,” she said, adding that talent shortages and the war in Ukraine have recently added to supply constraints. “There’s also been elevated demand in this post-pandemic period, partially driven by the stimulus that put money into the consumer’s hands, as well as into the market.”
Many Americans have little experience saving, spending, budgeting, and investing in such a high inflation environment. Here is how the experts recommend prioritizing your finances in the months ahead.
Step 1: Make a budget
Having a budget is always the best way to keep costs under control, and in recent years inflation has caused many Americans to take up the practice. According to a survey by debt.com, 80% budgeted their expenses in 2021, compared with only 68% in 2019.
If you’re among the 20% that still hasn’t mapped out your spending now is the time to do it, “just to keep track of how you’re spending and what you’re spending on, given that…
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