No matter where you get your news, inflation is one of the biggest topics. It’s more than just a buzzword, too. Rising costs are a significant threat to Americans trying to maintain financial security.
Housing, food, healthcare — everything costs more these days. It’s not clear when there will be a meaningful solution to inflation, and the odds that prices will go back to “normal” are slim to none.
How can you preserve wealth and ensure you can maintain the lifestyle you want? Let’s explore some strategies that help you keep more of your money — and keep it working for you — even as costs rise.
How Inflation Is Affecting Wealth in 2025
While much of the news about inflation is focused on the price of eggs, rising costs can impact many other aspects of your budget and financial goals.
Housing market
Mortgage interest rates are still fairly high, as are home prices. Additionally, rental costs have also risen significantly.
These high prices impact renters and first-time homebuyers, and they can make it harder for homeowners to move in response to job offers or changes in family circumstances.
High housing costs can also impact investors. Real estate investors and landlords may not receive the expected return on their investments.
Healthcare costs
Inflation plays a big role in healthcare costs as well. Insurance premiums may rise, and the cost of medications and medical care will likely go up. It’s also important to think about long-term care, especially if you are retired, close to retirement, or helping care for an elderly loved one. In light of potential changes to Medicare and Medicaid funding, it’s more important than ever to understand these costs (and their increases).
Lifestyle expenses
Daily living expenses, like groceries, transportation, and utilities, are rising. Non-essential spending is also more expensive — travel, dining out, and entertainment all cost more due to inflation.
Hidden costs
Some of the consequences of inflation don’t show up in your current budget — there are long-term impacts as well. Rising prices can make it difficult to hit savings or investment goals if the cost of living increases beyond your interest accrual or stock growth.
If you actively monitor your budget and retirement accounts, you’re probably already aware of the challenges inflation causes. Now it’s time to discuss what you can do about it.
Safeguard Your Spending Power With Tactical Financial Planning
Simply maintaining the status quo usually isn’t enough during high inflation — your money just doesn’t go as far as it used to. Try these steps to help combat rising costs and make your money last longer:
- Review your budget: Take a hard look at your expenses, especially the ones you can control. You might not be able to change your utility bills, but are there other areas where you could cut back without sacrificing the most important factors in your quality of life?
- Try negotiating: Subscription fees, insurance rates, and even some monthly bills — these are areas where you might be able to negotiate a better deal if you take the initiative to talk to your providers. It’s not always possible, but you won’t know if you don’t ask.
- Analyze your tax strategy: Now might be a great time to work with a CPA to see if there are any changes you can make to limit your tax liability.
- Re-evaluate your approach to debt: Debt isn’t a bad thing — it’s just another tool you can use to manage your money wisely. Run the numbers to see if refinancing or consolidating would help you reduce high-interest debt.
- Adjust your emergency fund: Remember, rising costs mean that your emergency savings may not go as far. For example, if you had saved three months of expenses, that money might only cover two months now. If possible, adjust your savings rate to keep your rainy day fund on track.
Like all financial decisions, dealing with inflation comes down to analyzing trade-offs. Identify what’s most important to you and your family, and make adjustments to support those top priorities.
Keep Your Money Growing With Smart Investments
Saving cash in a bank account can be good in terms of giving you access to liquid assets. But if your money is just sitting in an account earning interest at a rate that’s far lower than inflation, you can quickly lose buying power.
So, how can you ensure the return on your investments outpaces inflation? This is a good time to bring an expert on board.
A CERTIFIED FINANCIAL PLANNER® can create a customized investment plan for your unique financial situation and goals. These are some examples of strategies they may recommend.
- Diversification: Investing in a variety of assets, such as real estate and stocks, may help limit the impact of inflation on your portfolio.
- Tax strategies: Investment returns are typically taxable, but a CFP® can advise investments (and connect you with CPA professionals) to reduce tax liabilities where possible.
Investments can get complicated quickly, especially during times of high inflation and market instability. A financial planner can help you protect your money now and continue to make progress on your long-term goals.
Consider the Impact of Inflation on Your Retirement
If you’re close to retirement, it’s important to understand how inflation could impact your investments and savings. If inflation continues to increase rapidly when you retire, you may end up paying more for daily living expenses and healthcare costs than you originally calculated when you made your retirement plans.
As such, you might need to adjust your withdrawal strategy. For example, if you originally planned to follow the 4% rule — pulling 4% of your total funds a year and leaving the rest to grow — your distributions might not be enough to cover the higher costs you’re facing. Alternatively, you may be able to adjust your budget to lower your expenses so you don’t have to change your withdrawal strategy.
Again, this is a good time to consider working with a financial planner. A CFP® professional can help you understand your options for withdrawal and continued investment. They can also help you understand the pros and cons of delaying Social Security so you can decide when you want to start receiving your benefits.
Take Action to Stay On Track When Prices Continues to Rise
Managing your money can be stressful, especially when rising costs make a significant dent in your budget. Taking proactive steps can help reduce inflation’s impact on your budget and long-term financial goals.
Here at Guiding Wealth, we understand how inflation impacts everyone — new professionals, growing families, and retirees. Our team of CFP® professionals has the experience and knowledge to help you develop a comprehensive financial plan to adapt to inflation and stay on track with your goals.
Are you ready to learn how we can help ensure your money keeps working for you in 2025 and beyond? Schedule a consultation with our team!