We have all felt the sting of rising prices lately.
It’s not just the big stuff like cars and electronics that are more expensive. It is affecting us in our daily lives like at the grocery store and the gas pump. Inflation has arrived, and it has ramped up very quickly. Let’s take this time to explore what inflation is, the psychological toll it takes, and how to manage it.
What is inflation?
In its most basic form, inflation means your dollar has less purchasing power. One dollar doesn’t buy as much as it once did. My favorite financial literacy website, Investopedia, has a great infographic showing the effects of inflation on the price of a cup of coffee.
he price of coffee has increased significantly over time. This is especially true if you enjoy specialty coffee drinks. Price increases are caused in part by supply, demand, and wage increases. To help keep prices under control, a central bank, such as the Federal Reserve in the United States, is responsible for implementing policies to manage inflation. Get more information about inflation here and here.
How it makes us feel
Price increases at this particular moment in time are having a significant effect on our mental health. Rapid increases like these haven’t been seen in decades. It is reasonable to be angry every time you fill up your tank. However, what toll is it taking to carry around that extra stress? Has cash flow at home gotten tighter because everything costs more? Now is the time to recognize how these price increases are making us feel. Without acknowledging how we are feeling we cannot begin to manage it.
How to cope financially and emotionally
If you are finding that cash flow is tighter now, it’s time to examine what you need to make it less stressful. Start by honestly reflecting on your current financial situation. Are things tighter, but it is tolerable? If so, lean on your partner for support. Talk with them about what is stressful. Set the expectation that you are not looking for advice or for them to fix the problem. You just need to be heard. Getting those feelings out and knowing you are being heard and validated are very impactful experiences.
Are things getting so tight that you are using your credit cards more often? Now is the time to look at where to cut back before card balances become unmanageable. First, remove the temptation. Take your credit cards out of your wallet and delete them from online shopping sites. Take a pause from the “want to” purchases and focus on the “need to” purchases. Chances are your cash flow will feel better when you don’t have a credit card bill to pay. For personalized support to get you over this hump, you may benefit from my 3 month Coaching and Accountability service. Get more information here.
Are things so tight that you have depleted your savings account and you can’t pay off the credit card bill? More extensive financial planning may be helpful. We can work together to dig deep into your day to day routine and structure things to be less stressful and more financially efficient. Remember, I don’t create budgets. I do help you create a financially sustainable lifestyle that balances today’s wants and needs with what you need in the future.
If any of these scenarios resonate with you, please schedule a complimentary consultation. We can work together to make sure your financial decisions have the best possible impacts for your family and your future.
Christina Gatteri, CFP
Certified Financial Planner
Warwick, Rhode Island 02886