Don’t let inflation derail your finances

MARSHFIELD, WI (OnFocus) – According to Thrivent’s 2022 Consumer Financial Outlook Survey*, 63% of respondents said inflation is to blame for pushing them off track financially. In fact, more than three-quarters of those surveyed (76%) said inflation/cost increases are negatively impacting their savings and putting them in a more vulnerable position. Only a small percentage of those surveyed – 28% – said they are saving more than enough or a good amount right now.

The survey was conducted in partnership with data intelligence company Morning Consult and polled 2,221 adults across the country between May 9 and 17.

While the current financial environment may have you worried about the impact on your finances, there are ways to take control – and even potentially improve – your financial situation. Here are some actionable tips from Thrivent to help get back on track financially and hedge against inflation:

• Sort out emotions – Money decisions can stir up strong emotions. It’s normal to feel anxious, stressed or even scared.

We recommend getting emotions out on the table first by asking: What is most concerning to me? When people identify their emotions and what they’re concerned about, it can reduce 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 rebalance your investment mix to match your risk tolerance.

• Return to the basics – It’s a good practice to revisit your budget in response to significant changes to household income or expenses. With inflation driving up prices, now is a great time to get a grasp on your expenses and overall financial picture.

  First, outline how much money is coming in each month. Second, map out where that money is going: How much is being directed to your savings, bills, and everyday spending?

This exercise can be done in many different ways – using pen and paper, a spreadsheet, or a mobile app or digital tool. The most important thing is to get started. These initial insights can help you make more informed decisions about your money.

• Find a support system – It’s important to remember you don’t have to go at this alone. Having a trusted person to talk to about your finances can help you wrestle with your emotions, discover your behavioral patterns, chart a clear path forward and stay accountable to a strategy.

Begin by exploring your options. A financial advisor can be a sounding board for changing or competing financial goals. They can meet you where you’re at today – whether it’s starting from scratch or building 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 build a baseline understanding of their financial picture and establish healthy day-to-day budgeting, saving and spending habits.

4) Strengthen the financial foundation – There are a few initial steps you can consider taking to strengthen your financial foundation in the immediate term, including:

• Modifying your budget – With higher prices driving up expenses, reevaluate your budget and make spending tradeoffs to continue living within your means. Depending on what your priorities are, you can find ways to scale back, like shopping smarter at the grocery store or eliminating recurring subscriptions. Finding a way to cut back even $25-50 a week frees up an extra $100-200 a month that can be dedicated to other purposes. 
• Establishing 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 isn’t the time to lose sight of your emergency savings.

The general rule of thumb is to save enough to cover three to six months of expenses. Due to inflation, consider increasing the amount you’re putting away every paycheck. Having additional reserves available can give you greater confidence and help you weather the higher prices we’re experiencing right now.

• Managing debt – Dealing with debt in addition to inflation can put even more strain on your finances. For those with debt, devise a strategy for tackling it. Depending on the amount, think about prioritizing smaller debts first and then work your way up to the largest amount. Or focus on paying the debt with the highest interest rate first. Consolidating your debt may be a third option.

5) Revisit investments – To help minimize the long-term effect of inflation on the growth of assets, now may be an ideal time to revisit your risk tolerance and compare that to your investment allocation. If needed, a financial advisor can help you diversify your portfolio to better match your current risk tolerance, investment objectives 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 that current pressures may be preventing them from doing it. For example, 77% of those surveyed said automating savings is very or somewhat effective, yet only 41% currently do it. For many, this may be a missed opportunity that doesn’t have to be. If you can “set it and forget it,” this is an easier way to build meaningful savings over the span of several years.

Practicing other smart behaviors, like living within your means, following a budget and sticking to a financial strategy, can also put you on better financial footing.

While the effects of inflation can feel overwhelming, don’t let it derail your finances. By seeking help, focusing on your financial strategy and sticking to your goals, you can successfully navigate this period – and emerge in an even stronger financial position to tackle whatever comes tomorrow.

 

This article was prepared by Thrivent for use by Nate Heeg. He has offices at 2001 S Central Ave, Ste I in Marshfield and can also be reached at 715-389-2278 option 1.

About Thrivent

Thrivent is a diversified financial services organization that helps people achieve financial clarity, enabling lives full of meaning and gratitude. Thrivent and its subsidiary and affiliate companies serve more than 2.3 million clients, offering advice, insurance, investments, banking and generosity products and programs over the phone, online as well as through financial professionals and independent agents nationwide. Thrivent is a Fortune 500 company with $189 billion in assets under management/advisement (as of 12/31/21). Thrivent carries an A++ (Superior) rating from AM Best, a credit rating agency; this is the highest of the agency’s 13 rating categories and was affirmed in June of 2022. Rating based on Thrivent’s financial strength and claims-paying ability. Does not apply to investment product performance. For more information, visit Thrivent.com . You can also find us on Facebook and Twitter .

Thrivent is the marketing name for Thrivent Financial for Lutherans. Insurance products issued by Thrivent. Not available in all states. Securities and investment advisory services offered through Thrivent Investment Management Inc., a registered investment adviser, member FINRA and SIPC, and a subsidiary of Thrivent. Licensed agent/producer of Thrivent. Registered representative of Thrivent Investment Management, Inc. Advisory services available through investment adviser representatives only. Thrivent.com/disclosures.

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About Morning Consult

Morning Consult is a global decision intelligence company changing how modern leaders make smarter, faster, better decisions. The company pairs its proprietary high-frequency data with applied artificial intelligence to better inform decisions on what people think and how they will act. For more information, please visit morningconsult.com.

*Methodology

This general population research was conducted in partnership with data intelligence company Morning Consult and polled 2,221 adults across the country between May 9 and 17, 2022. The interviews were conducted online, and the data were weighted to approximate a target sample of nationally representative adults based on age, gender, ethnicity, income, geography. Results from the full survey have a margin of error of +/- 2 percentage points.

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