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19 Ways to ‘Fight Inflation’ and Protect Purchasing Power in Turbulent Times

Strong demand and supply chain bottlenecks are affecting inflation in the US right now. Shield your finances and protect your purchasing power with these strategies, from smart shopping to wealth diversification.

Stay Informed About Inflation Trends

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Understanding inflation and its impact on your money is crucial. Keeping an eye on inflation trends helps you make informed decisions about saving, investing, and spending. When inflation is high, consider investments that typically outpace inflation, like stocks or real estate. Being proactive about inflation can help maintain your purchasing power.

Consider Precious Metals

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Precious metals like gold and silver have historically been safe havens during times of economic uncertainty. They often retain value and can even appreciate when other investments decline. Including a modest allocation of precious metals in your portfolio can provide a hedge against inflation. Be sure to research and understand the risks involved.

Reduce Debt

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High-interest debt can erode your purchasing power faster than inflation. Focusing on paying off such debts, especially credit card debt frees up more of your income for saving and investing. Adopting strategies like the debt snowball or avalanche method can be effective. Reducing debt levels ensures that more of your money works for you, not your creditors.

Use Tax-Advantaged Accounts

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Maximizing contributions to tax-advantaged accounts like 401(k)s and IRAs can boost your purchasing power. These accounts offer tax benefits, either upfront or in retirement, making them powerful tools for wealth accumulation. Understanding the specifics of each account type and how they fit into your financial plan is key. Leveraging these accounts can lead to significant long-term financial growth.

Diversify Your Investments

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Diversifying your portfolio is akin to not putting all your eggs in one basket. By spreading your investments across various asset classes, you reduce the risk of a significant loss. It’s a strategic move that can safeguard your purchasing power against market volatility. This approach can include stocks, bonds, real estate, and even commodities, each reacting differently to the same economic conditions.

Embrace Budgeting

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Budgeting is your financial compass, guiding you through uncertain economic landscapes. It involves tracking your income and expenses, ensuring you live within your means. You can save more and protect your purchasing power by prioritizing essential expenditures and eliminating unnecessary ones. This practice also prepares you for unexpected financial downturns, providing security.

Shop Smart

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Smart shopping isn’t just about finding the best deals; it’s about strategic purchasing. Buying quality items that last longer can save money in the long run, reducing the need for frequent replacements. Using cashback and reward programs can also stretch your dollar further. Shopping smart ensures your money retains its value through wise consumption choices.

Adjust Your Lifestyle

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Sometimes, protecting your purchasing power means adjusting your lifestyle to match economic realities. This doesn’t necessarily mean living frugally but rather making more conscious spending choices. Opting for experiences over material goods, for example, can lead to greater satisfaction without straining your finances. Lifestyle adjustments can be a proactive way to ensure your money keeps up with the times.

Negotiate Better Deals

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Whether it’s a salary negotiation or lowering your monthly bills, the art of negotiation can directly impact your purchasing power. Regularly reviewing and negotiating service contracts can lead to significant savings. In the workplace, advocating for a well-deserved raise can align your income with your value. Effective negotiation skills put you in control of your financial destiny.

Invest in Real Estate

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Real estate can be a powerful tool for preserving purchasing power. Whether through rental income or property appreciation, real estate investments can provide a hedge against inflation. It requires due diligence and sometimes a significant upfront investment, but the long-term payoff can be substantial. Real estate can diversify your investment portfolio and contribute to financial stability.

Use Technology for Budget Management

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Technology has made managing finances easier and more efficient. Using budgeting apps and financial tools can help you track spending, save money, and invest wisely. These tools provide insights into your financial habits, helping you make informed decisions. Leveraging technology can streamline your financial management and protect your purchasing power.

Focus on Health and Wellness

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Investing in your health is investing in your financial future. Good health can reduce medical expenses and maintain your earning potential. Regular exercise, a balanced diet, and preventive healthcare can save money in the long run. Prioritizing health is a wise investment that pays dividends in both quality of life and financial stability.

Explore Side Hustles

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In today’s gig economy, side hustles can provide an additional income stream, bolstering your purchasing power. Whether freelancing, selling products online, or part-time work, side hustles can help you save and invest more. Balancing time and energy is important, but a successful side hustle can be a financial game-changer.

Consider Long-Term Care Insurance

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Long-term care insurance can protect your purchasing power by covering costs that Medicare and regular health insurance may not. This type of insurance can be particularly important as you age, ensuring that unforeseen health issues do not deplete savings. It’s a consideration that requires thorough research and planning but can provide peace of mind and financial security.

Monitor Credit Score

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A healthy credit score can save you money on interest rates, insurance, and even job opportunities. Regularly monitoring and improving your credit score ensures access to better financial products and rates. Practices like paying bills on time, keeping balances low, and not opening unnecessary credit accounts can help maintain a strong credit score. A good credit score is a cornerstone of financial health and purchasing power.

Invest in Renewable Energy

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Investing in renewable energy, like solar panels for your home, can reduce utility bills and increase property value. While the initial investment can be high, long-term savings and potential tax incentives make it worthwhile. Renewable energy investments contribute to a sustainable future and prevent rising energy costs, preserving purchasing power.

Engage in Community Exchange Systems

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Participating in community exchange systems, like time banks or local barter exchanges, can stretch your purchasing power. These systems allow members to trade goods and services without exchanging money, fostering community while conserving financial resources. It’s a way to meet needs and share skills without impacting your wallet, enriching your life and community.

Invest in Dividend-Paying Stocks

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Dividend-paying stocks can provide a steady income stream, enhancing your purchasing power. These stocks pay out a portion of their earnings to shareholders, offering a dual benefit of income and potential capital appreciation. Research and select companies with a strong history of dividend payments.

Practice Mindful Spending

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Mindful spending involves being deliberate and thoughtful with every purchase. It encourages asking whether a purchase aligns with your values and long-term goals. This practice can prevent impulsive buying, ensuring your money is spent on things that truly matter to you. Mindful spending can lead to greater financial freedom and happiness, truly maximizing your purchasing power.

Josh Dudick

Josh is a financial expert with over 15 years of experience on Wall Street as a senior market strategist and trader. His career has spanned from working on the New York Stock Exchange floor to investment management and portfolio trading at Citibank, Chicago Trading Company, and Flow Traders.

Josh graduated from Cornell University with a degree from the Dyson School of Applied Economics & Management at the SC Johnson College of Business. He has held multiple professional licenses during his career, including FINRA Series 3, 7, 24, 55, Nasdaq OMX, Xetra & Eurex (German), and SIX (Swiss) trading licenses. Josh served as a senior trader and strategist, business partner, and head of futures in his former roles on Wall Street.

Josh's work and authoritative advice have appeared in major publications like Nasdaq, Forbes, The Sun, Yahoo! Finance, CBS News, Fortune, The Street, MSN Money, and Go Banking Rates. Josh currently holds areas of expertise in investing, wealth management, capital markets, taxes, real estate, cryptocurrencies, and personal finance.

Josh currently runs a wealth management business and investment firm. Additionally, he is the founder and CEO of Top Dollar, where he teaches others how to build 6-figure passive income with smart money strategies that he uses professionally.