Your spending doesn’t need to go up just because prices do. Here’s how to be smart about inflation.

Over the summer, Fed chairman Jerome Powell and other big-name economists predicted sustained inflation was “highly unlikely.” I disagreed and said so publicly.

I’m not necessarily smarter than the Fed chairman, but as a debt counselor for nearly three decades, I know people more than policy – and people decide how the economy will fare.

If I was right about inflation – which has only gotten worse since the experts said it wouldn’t – perhaps you’ll heed my advice for not letting it sap your savings and bend your spending.

How to use your money right

First, let me dispense with this: Most inflation advice is about investing. You’ll hear about which stocks and bonds are the best hedge against rising prices. We’re not talking about that. Most Americans don’t invest in the markets, except within their retirement accounts. In fact, according to Pew Research, only about a third own “investments in stocks, bonds or mutual funds other than those held in an IRA or 401(k).”

So I’m much more interested in dealing with inflation from the perspective of household spending. While you can’t control price hikes, you can certainly control your own dollars. Let’s review some simple tactics.

Find out: How to Deal With Pandemic Price Hikes

1. Stick to your household budget

If you have a monthly household budget – and 8 in 10 Americans do – then you need to create one pronto. Research shows all but a fraction of budgeters report it helps them stay out of debt. That’s important anyway, but even more these days. When prices rise, typically your income doesn’t. You need to make up that difference, and it’s only going to come from more efficiently spending what you have.

Find out: 5 Tips to Sticking to Your Budget

2. Deal with credit card balances NOW

Inflation not only erodes the value of your money, it can actually add to your debt. When inflation rises, so can the interest rates that credit card companies charge you. So it makes sense from both sides of the ledger to eliminate this pernicious form of debt right away. The average credit card interest rate hovers around 8 to 20 percent – which means you’re paying nearly $1 in interest for every $5 you charge.

Good economy or bad, that’s a sheer waste of your money. Especially now, however, you should take steps to pay down those big balances so you can keep more of your money.

Find out: Don’t Make These 6 Mistakes When Paying Off Debt

3. Get professional help

You can bet businesses are consulting CPAs like me and other experts when it comes to setting their prices in these inflationary times. You should consult an expert to fight back. For you, that’s a certified credit counselor at a nonprofit credit counseling agency. These pros will give you a free debt analysis and lay out all your options for getting out of debt and staying there.

Find out: 5 Ways Credit Counseling can Help You Pay Off Debt

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About the Author

Howard Dvorkin, CPA

Howard Dvorkin, CPA

I’m a certified public accountant who has authored two books on getting out of debt, Credit Hell and Power Up, and I am one of the personal finance experts for I have focused my professional endeavors in the consumer finance, technology, media and real estate industries creating not only, but also Financial Apps and Start Fresh Today, among others. My personal finance advice has been included in countless articles, and has appeared in the New York Times, the Washington Post, Forbes and Entrepreneur as well as virtually every national and local newspaper in the country. Everyone should have a reason for living that’s bigger than themselves, and besides my family, mine is this: Teaching Americans how to live happily within their means. To me, money is not the root of all evil. Poor money management is. Money cannot buy happiness, but going into debt always buys misery. That’s why I launched I’m glad you’re here.

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