Ep 114 | How to Protect Yourself from Inflation

Inflation isn’t going away, but you can take control of your financial future. In this episode, I’ll specifically share how to protect yourself from inflation. In this episode, I will share two components to help protect you against the rising cost of living and lessen your worry about retirement planning. Learn how to create your own economy so you can navigate rising costs and stay on track for retirement.

Within this episode you’ll learn:

✅ Personal finance strategies to protect yourself

✅ How to create your own economy

✅ Why saving for unexpected expenses is crucial

✅ How to create financial stability and get ready for retirement

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Transcript

 Welcome to the episode, and before we dive into the topic, I want to celebrate my client, who now feels she is in control of her money. She shared this with me during a month that was really hard financially, a lot of changes, a lot of things that she needed to. Put into her essentials, but she said, I had the means and I knew how to take control.

If you're interested in learning how to be more in control, book a free q and a call. Let's chat about how that will work for you and discover the next move and working together.

Today's topic, inflation, everyone's talking about it. You, I'm sure you have had the conversation with family, friends, coworkers, neighbors, seen it on social media,  read it or heard it in the news. All of the, those things. And really when everyone is talking about it, sometimes we get this feeling of, oh my gosh, this is this is horrible.

This is nothing.  we can't handle this and it's really just gonna kill us. Having said that, inflation is nothing new. Now, there are times in the economy where it is.  sky high, it does drop a little bit. It will never decrease to what it was. We know that from our parents having mortgage payments of a hundred dollars,  to now individuals having mortgage payment of $4,000, that is inflation.

And recognizing this in understanding this is important. However, I don't expect you to go take a micro or macro economics course, believe me. Therefore those individuals could, can work all of those things in their brain. I sat through those. They were entertaining enough, but very wow. But overall, they helped me understand kind of how the economy works and kind of the understanding of how it's going to affect me.

I hope through this episode I can can, I can support you in understanding, but also being prepared with,  your arsenal, how you're going to specifically take action. That's where we're gonna find the power and that's the most important. But before we dive into that, I wanna go back to everyone's talking about it, and so there seems to be this doom and gloom.

 especially those of us who are looking at retirement, waiting for retirement, hoping retirement, and then when this discussion do you really just go, well, it's never gonna happen. Is that true, is what I wanna ask you, or is that a sense of failing you're getting Because everybody is talking about it,  it's, it's hard to determine that for yourself if you're uncertain about.

Your finances and where they're going initially. As you are exploring this and as you're hearing, hearing this, you might be thinking, ah, well my budget's a little tight now, especially if you're keeping track of it. You might be thinking, how am I going to be able to retire? Yes, it is still possible.

And the thing I want you to take from today's episode, if you take nothing else is what a better time to learn how to navigate inflation while you have that regular paying job than waiting to try and do it in retirement. You know, the better we have a sense on. Our personal finances,  pre-retirement, that transition to and through is going to be so much easier.

While inflation is something that is always happening, it's not just this year, it's not just with the things that are happening. I remember 2022. Three years ago, retired and by the end of summer. Wow. Yeah. There was some, especially just on utility bills, that's where I was seeing it. And so every area of your spending will get hit at different times.

There's a reasons for that. And again, I'm not gonna take you through economics, but understanding,  there's several components, but the consumer price index, which is ultimately inflation for us. If you're an economics major, sorry. Please don't correct me. I'm trying to make this as simple as possible, but the CPI is a guide for employers to raise, raise wages.

When you're wanting that wage raise. In a sense that it comes from the CPI, it comes from that inflation. There is times that CPI goes down, so  that's our gauge and that's our guide to inflation. So how can you create an economy of your own to be supportive of you in times like this?  There are two essential components that will help you be better at navigating inflation and with these two components, I just wanna do a visual first before I tell you,  what they are and how to do them.

'cause you've heard them before, but I want to kind of explain how the effect happens. We are all here going to ride the wave of prices. So think about boats out on the ocean. I'm sure you've seen whether it was in person or on tv. And you've got small boats, you've got some larger boats. And the waves. The waves are pretty much the same size, regardless of the size of the boat.

And if those waves get too big, those small boats, I don't think they can handle them as well. Maybe they'll be okay, I don't know. But looking at it,  you can see the turmoil mo more so with those as opposed to the larger boat. Creating your own economy would be like creating a larger boat to be able to float those waves much more easily.

It does not mean that those waves are gonna be gone. There's no way to make those be gone. Part of that is understanding it's going to happen. Prices are going to increase. We just wish it would do it at a slower, steady pace. But that is not the way that the market reacts. That is not the way we react,  and all of those things have an effect on how this inflation happens.

The two essential components that you need to make sure is happening for your own economy is first budgeting. Yes, I said the B word and tracking and doing those together. The second thing is to be sure you are saving for your sinking funds and your savings goals. That is where your ultimate protection comes in in inflation.

Budgeting and tracking helps you see it more quickly. Being prepared as opposed to getting caught in a trap and not,  not knowing when it, why it came out of the blue.  That's probably what it's going to do. Those are two skills, hard skills that you can learn and put in a place. We'll talk about 'em a little bit more, but the third thing is a soft skill.

It's awareness. Awareness that you align with your tracking. Kind of,  being more aware as to, oh, well the last time I bought the meal at McDonald's it was only,  8 99 and now it's 1299.  paying attention to those types of things. Groceries,  I spend X amount when I do my meal planning.

That is a very similar, a lot of us eat a lot of the same stuff and it costs,  about. Let's say 90 bucks a week or 120 a week. This varies as to the number of people in your household, just using some numbers. But seeing that, and then all of a sudden now it's cost. ,it's costing you 130, 150 or 180 regularly.

Okay? I am not talking about that one time. Being able to build up that awareness skill will alert you. More quickly than the talk around town, the news reporting it, having to rely on that to then go, oh crap, is it hitting me? What do I need to do now? You probably already knew about it before it happened.

Those three things. Really give you the option to pivot. Okay? I'm gonna take you back Gen Xers, and whether you were a fan of it or not, the friends episode is so popular with that couch and Ross is just screaming a pivot. You know, there's nowhere to pivot to. Those barriers are in the way. There's no way to move those if you are not preparing your economy.

To pivot, you're gonna be yelling and screaming just like Ross. What do you need to do? Step one, create a budget. There's a couple of episodes in the future. I will be talking more specifically about budgeting, not a how to. I hope you'll tune in as to the why of budgeting, but it's important to create a budget that becomes your framework of.

Here's my money, here's how much I have. These are my obligations. You know, your bills, and then your essentials such as groceries and fuel. And then you have another area that is your fund and your savings,  those are your extras. So that can be a very simple  three category budget.

Maybe you're somebody that wants a little more detail. Great. You need to choose something that you're going to stick with and understand. And if it's simple in like, okay, I'm meeting my obligations, I know who I have to pay and when I know what those amounts are, and you got it, that framework, right there, great.

And then I know my essentials for every single week or every single two weeks is this much great,  and don't just go out and grab a budget template. Because it may not fit your style may not fit your needs. You can use it as a guide, but really the purpose of that budget is to help you understand, number one, your obligations, who you pay, and then how much you spend on essential living.

And then thirdly, what's quote leftover for fun and savings and being able to flow through. Now, if you remember from earlier when I talked about what we're covering in step two. That fund and savings is your protection for inflation. It's, it's essential to be able to have money that while it is needed in the creation of your financial lifestyle to the extent of, fun and things like that, you can still pull out of there to support you.

Having said that, in 2022, when I retired by the end of August, my natural gas utility bill, so utilities at this time jumped 90 bucks a month. I was like, wow, okay. That's not just a small increase. Being able to shift from those savings buckets into utilities, into my bills that are essential, I'm obligated to pay that.

While it wasn't fun, I had the money to do that. That is how you protect yourself with inflation. Step two, make sure you are setting aside money in liquid savings. It's gotta be in a savings account that you, not an investment account. We're talking about something you can get to within 24, hours.

'cause sometimes high yield savings takes a little bit of time, but being able to get that but shift that. Our savings is money. We're setting aside monthly, not just when we have a leftover, not just when we get that bonus, not when the commission comes or whatever it is. This should be an amount that is going into, that is a part of your budget that is going into that savings account every single month.

And then when you have inflation come in and you're like, well, I need $30 more a month for groceries. That's what inflation has done. We know where to shift it and move it from, and while traveling is great, it might just take us longer to get there. When you're setting money aside, the key, essential key to start with are those.

Irregular, or as I know, many people call 'em random, and they're not random expenses such as birthdays, Christmas, car registration, HOA fees, insurances that are not paid monthly, those sports and activities, fees, memberships, et cetera. I could go on and on and on. Then you want to think about maintenance for your cars and your homes, as well as any repairs that you might need.

Being able to have those and support those is key. And then the rest is, what will support your home remodels, your traveling abroad, or traveling, just, on a local road trip or whatever it may be. Setting that amount every single month. Is game changing when inflation hits you is also game changing for the ability to be able to do all of those things.

So make sure you are doing that. The other key thing that if you have that money and that liquid savings, it goes to that term, you're living less than you make. If you're able to do that, even with just a hundred dollars a month right now, that is key. Being able to feel like I don't need it all, and so how do I make this leftover

support me that a hundred dollars goes to your car registration, your HOA fees, those things that are not monthly and you're setting it aside. In end of the year, you have $1,200 to cover whatever it is you need. It also helps protect you from growing debt. If you don't set this money aside and all of a sudden something pops up, 

like I said, that's not random. They're usually very regular. They're just not in that monthly idea. And we turn to our credit cards and those are the things that make us feel like we overspend. And honestly, that is not the case. If you're unsure how to implement these steps and you feel like you don't have the time to try and figure it out, consider the retirement ready VIP session.

We'll, not only implement just these components in that two hour session, we're also going to explore what your outlook on retirement looks like, how you can get there, what are you doing right now? What changes do you need to make? It's a wonderful, fun-filled time of two hours. I do give a break in that so we can get the blood flowing and, all of those creative juices back in.

But it's a, a great two hours of. Your time to be able to start building your own economy that will protect you from inflation in the future. Having this modeled now, you can carry that into retirement. Why wait and try and figure that out then? It's very important to be creating these. These frameworks, these steps, these understandings, these, the awareness piece, just so that you can start getting a feel of how things truly are for you.

If you were a part of my newsletter, I talked about the egg prices and after I heard the hubbub, I was like, what? I really took it in and spent time for what that meant for me. and so being able to have the data and I'm not asking you to be an analyst, but to understand your positioning in your economy.

When something like that starts changing, you start hearing that you can bring that back to what you're not stuck with that scarcity mindset, panicking and making bad decisions or decisions that are going to slow down the process. You're really more. In a position of understanding to make the best choice for you.

We've covered a lot. Inflation is not a fun subject, but it is something that will continue to exist. We hope it will slow and steady as that will make things a whole lot easier. But there's different factors, different things that affect it. Some we have control on, some we don't. Take the control of what you do have, create that budget, create that awareness and that tracking, and create those savings funds so that when something does go up as a constant, you have somewhere to cover it from.

Thank you for listening. I hope you found a value, and if you have found any value from this episode and have not yet, please leave a review. This helps others join in our community and being able to reach retirement until next week.