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How Does Inflation Affect Investments?

There’s no doubt about it, inflation is on the rise and it doesn’t look like it’s going to stop any time soon. What does the rise in prices mean for your investing plan? Can you still invest? Should you still invest? How does inflation affect investment returns? Tightening your belt doesn’t necessarily mean you shouldn’t set aside money for investing. Let’s take a look at some things you can do to get by and also to continue on your journey of building generational wealth.

What is Inflation?

To put it simply, inflation happens when prices of services and goods increase but wages stay the same. Costs to produce certain goods might go up due to increased prices for materials. Current events might also bring about inflation, especially if countries are at war or materials are getting more sparse and harder to find or produce. This means you’ll be paying more for gas, goods, and groceries, but not necessarily making any more at your job.

Reduce Your Bills

One thing you can do in the face of inflation is take a look at your bills and see where you might be able to cut corners. Some credit card companies will help you get on payment programs if you claim financial strain, such as 0% interest for six months, and this will help you to get back on track with your payments. 

Grab a blanket rather than turning on the heater. Keep your lights off and find fun and free things to do with family. Longer days are upon us. Turn off your lights and enjoy time with your kids outside or in the kitchen. Make quality time for being together rather than spending money. Start a family game night or implement a quiet reading time.

Buy Groceries in Bulk

Sometimes it feels like we’re paying more when we buy groceries in bulk, but we’re actually spending less for the amount of groceries we receive. Buying in bulk helps to reduce the cost of groceries overall. If you’re a member of Costco, utilize their Instacart online to take advantage of their bulk groceries delivered right to your door. Not a member? Not a problem! Instacart has a workaround. If you’re not a member of Costco, simply leave the member number section blank and you’ll still be able to order your groceries regardless. 

You might also look into getting a 30-day free membership from Sam’s Club and take advantage of that service while you have it.

Reduce Spending but Not Investing

During this season of inflation, you’ll want to cut back your spending so that you won’t need to cut back on your investing. Remember, investing is long-term wealth building, and what you don’t have now, you’ll have in the future. Whatever amount you’ve decided to regularly invest, determine to continue with that trend as much as you can. Every little investment counts, even when times are tight. When it’s all said and done, you’ll be glad you chose long-term wealth over short-term comfort.

To learn more about investing, closing the racial wealth gap, and growing generational wealth for Black and brown families, please visit Financial Joy School and become a part of our financial family.


Author FJS

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