If you’re like most Americans, despite inflation finally slowing down, you’ve probably been feeling the sting. Inflation was at 6.5% for the 12 months ending in December 2022. Although they likely don’t have to worry about taking their own advice, many financial experts have advice on inflation that may help the rest of us.
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Regarding inflation, Jerome Powell, chair of the Federal Reserve Board, states, “For starters, we need to raise interest rates to a level that is sufficiently restrictive to return inflation to 2 percent.” Many fear raising rates could lead to a recession, but according to Powell, this may be necessary.
Powell states, “high inflation is imposing significant hardship, straining budgets and shrinking what paychecks will buy. This is especially painful for those least able to meet the higher costs of essentials like food, housing, and transportation.” So perhaps the advice here is to prepare for a recession.
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Suze Orman is an author and personal finance expert who offers financial advice to everyday people on her website. Her inflation advice is to keep on track with your savings, especially for retirement. She urges people to look at their spending to see where they could cut back, going even so far as to get rid of a car.
“I am serious. Especially for 2 car (or 3 car) families whose commuting needs have changed. Might you need to coordinate if you are sharing one car? Yep. Might you save a lot of money on insurance and maintenance costs? Bigger yep,” says Orman.
Danetha Doe, the founder of the popular personal finance blog Money & Mimosas shares advice about building wealth in a way that is socially and environmentally conscious. Her advice is to categorize and track your purchases, practice mindful spending, and diversify your cash flow income streams during uncertain times. Doe also advises investing your money to beat inflation or meet inflation. “If you look at your savings account, unfortunately, your savings account is not one of those places. Most savings accounts hover around 1% or less.”
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Radio host and author has a lot to say about inflation. Ramsey is a huge proponent of budgeting even in normal times but continues to stress the idea even more during this period of high inflation. He urges his readers to ensure they can “protect their four walls” by cutting expenses in other areas to make sure they can first cover food, utilities, housing, and transportation. “Make sure to take care of these in that order. Then, if you have money left over, prioritize the rest of your expenses after those first four are taken care of,” says Ramsey.
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Former hedge fund manager and current host of CNBC’s “Mad Money,” Jim Cramer urges calm amidst the storm. His inflation advice is to trust Jerome Powell. He also encourages investors not to panic and sell off their stocks since doing so only locks in losses. Speaking of Jerome Powell, Cramer says, “He’s one of the best central bankers in the world, and he’s got a winning hand. Would you please just let him play it.”
Warren Buffett has some excellent inflation and life advice that everyone, no matter how wealthy or poor, can take to heart. According to Buffett, the best thing anyone can do to protect themselves against inflation is to invest in themselves and their skills. “If you’re the best teacher, if you’re the best surgeon, if you’re the best lawyer, you will get your share of the national economic pie regardless of the value of whatever the currency may be,” said Buffett in 2009, and the message still rings true today.
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Host of “The Claman Countdown,” Liz Claman is considered by GOBankingRates to be one of the most influential financial advisers of our day. In a July 2022 interview with Yahoo Finance, here’s what she advised about inflation: “Start making tough spending decisions. Go through your daily spending, write it all out, and then slash and burn. Downgrade to less expensive products. Cut out subscriptions you’re not using enough. Delete apps that cost money — even if it’s just a few bucks.”
Kevin O’Leary is a businessman and oft-loved or hated Shark on ABC's "Shark Tank. O’Leary says the worst thing you can do with your money during times of high inflation is leave it sitting in a bank account. Instead, he, like many financial experts, advises investing everything beyond your emergency fund in low-cost index funds to keep up with or hopefully beat inflation. “Right now in a bank account, you’re getting [very little] interest,” O’Leary says. “And inflation is over 6%. So you’re actually losing money every 12 months.”
Another Shark and billionaire investor, Cuban suggests people have 6 months of income saved in an emergency fund. “If you don't like your job at some point or you get fired or you have to move or something goes wrong, you know, you're gonna need at least six months income,” says Cuban. While this may be tough to do now that inflation is already high, it is one of the best ways to prepare for an unexpected job loss or another emergency. Since recession fears are not unfounded, Cuban’s advice is solid if you can make it happen. If you have an emergency fund saved already, be sure to keep it liquid in case you need to use it.
Andrea Woroch, a nationally recognized consumer finance and budgeting expert, author, and regular on-air contributor for top shows like "Good Morning America" and "Good Day Chicago" has plenty of inflation advice for consumers. “Consolidate high-interest debt,” says Woroch. Carrying debt across multiple accounts can dry out your budget quickly thanks to high-interest fees. With interest rates on the rise, get a handle on any variable-rate debt by consolidating with a low-interest personal loan. Another option is to transfer your balance to a 0% balance transfer card. This gives you anywhere from 12 to 21 months to pay down debt without interest fees eating up your payments, which can free up cash each month so you can afford higher grocery and gas prices. Woroch recommends using a site like CardRates.com to find the best balance transfer card for your needs.
Huffington Post finance expert Tiffany “The Budgetnista” Aliche is known for explaining finances in a way that makes sense to everyone. It should come as no surprise that her advice for managing inflation is this: “Spend less or make more.” That is the only way to make your budget work as the price of goods increases. The challenge with spending less is that everything is becoming more costly these days. Budgeting and cutting out nonessentials is one way to make this happen. As for making more money, consider adding a side hustle or seeing a raise or promotion at work.
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Personal finance expert, author and contributing editor at Next Advisor shares in an interview on "Kelly and Ryan" that cutting down on food waste is an easy way to save money. This is especially important since the cost of food has risen so dramatically. “Tip number one is, make sure you’re using the right amount of food and that you are shopping your pantry before you go to the grocery store and getting creative with leftovers,” says Torabi.
Author of “Broke Millennial,” Erin Lowry recommends that while people shouldn’t panic because of inflation, there are some important things to consider. In an article in the Washington Post, Lowry advised, “Inflation is the reason it’s critical to invest instead of storing your money under a mattress. Leaving all your money in cash means it essentially loses value to inflation every year. This is bread-and-butter personal finance stuff.”
Financial educator and writer of the popular personal finance blog I Will Teach You to Be Rich, Ramit Sethi recommends considering the long plan in your battle against inflation. “The way to beat inflation is to invest," Sethi said. "At least 10% of your money should be going to investments, automatically, every month. If you're doing this, then you will be beating the effects of inflation over the long term."
One of the best ways to tackle inflation is “cutting extra expenses from your budget, negotiating to lower your bills and working on diversifying your income,” says Tori Dunlap, founder of Her First 100K and Financial Feminist podcast host.
Rachel Cruze, a No.1 New York Times bestselling author of several financial books, says having a budget is critical. Cruze stresses that having an idea of your budget or keeping it in your head isn’t sufficient. “You need to budget. A lot of people say, ‘Well my budget’s in my head’ or ‘I think I know what’s going on.' You have to be so diligent [about] where every dollar is going. So I want it [to be] visual”.
“Cut back on non-necessities” is the inflation advice Tonya Rapley, author of “The Money Manual” gives. She also encourages individuals to earn more money. Thankfully, there are plenty of easy ways to make extra money that can help.“Maximize your earning potential and then consistently position your money to make more money through active and passive investments,” Rapley goes on to say.
Author of “Secrets of Six Figure Women,” Barbara Huson says one of the most important things to remember regarding inflation is not to let fear paralyze you. Additionally, she advises managing your money based on when you will need it. For money needed in the next three-to-five years, she recommends cash or cash equivalents like CDs. Money needed in five-to-10 years is best invested in a mix of conservative stocks and bonds. For longer-term goals that are 10 years out or more, stocks, commodities, and perhaps real estate is what Huson recommends to beat inflation. “You can’t eliminate inflation. But you can do a lot to protect yourself from it.”
Andrew Lokenauth, founder of Fluent in Finance and professor at the University of San Francisco, recommends “diversifying your income streams to help you weather the impact of inflation on any one source of income. Consider starting a side business or looking for a second job to increase your income.” He also recommends increasing income in other ways such as asking for a promotion or a raise at work. Getting a new job could also lead to a rapid and large pay increase.
Founder of Female in Finance, Leandra Peters, says real estate investment is still one of the best ways to protect your wealth from inflation. Although many fear another housing market crash, Peters says, “Private real estate is expected to have strong returns in an environment where inflation is high.” She recommends real estate investments be just one piece of a well-diversified portfolio.
Often considered one of the best investors of all time, Peter Lynch’s advice on inflation unsurprisingly relates to investing. Considering that he managed the successful Magellan Fund at Fidelity, his investment advice is well-grounded. Lynch once said, “A correction is a wonderful opportunity to buy your favorite companies at a bargain price.” So if you’ve got the money to spare, the market volatility often brought on by inflation can offer a wonderful time to invest.
