Inflation is a nightmare for the many Americans who already stretch their dollars to cover basic needs. What happens when those dollars lose value?
Their choice is probably not about whether to cut streaming services or opt for store-brand groceries. Instead, they may have to pick between buying enough food and paying rent.
The families hit hardest by inflation typically have little in savings and other resources. And that lack of access to wealth can be rooted in a history of inequality, says Phuong Luong, a Massachusetts-based certified financial planner and founder of Just Wealth, a financial education and consulting firm.
For example, say generations of your family have been underpaid or limited in where they can live, due in part to racist policies. Then inflation causes everything to become more expensive.
You may have to scrape together cash to support not just yourself, but also family or community members. Perhaps you have to spend money and time travelling across town to the grocery store or doctor’s office.
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“Your proximity to people with resources and people with wealth is going to be different depending on where you live and who you are,” Luong said. “There’s a larger context than just expenses and budgeting.”
Whatever context describes your situation, here’s how to combat inflation if money is already tight.
Aim to pay for expenses that enable you to live safely: housing (mortgage or rent), utilities and food. Also try to cover costs that help you work, such as transportation, cellphone and child care.
Next-level priorities are those that trigger major consequences if you don’t pay: taxes, child support and insurance.
For credit cards, aim to pay your minimum at least, because you may need that credit access.
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