Inflation Survival Guide – Adjusting Your Money Mindset for Tough Times is Your Best Bet

The most effective action you can take now is to adjust your money mindset.

Your money mindset encompasses thoughts, feelings, and attitudes you have about money and how they play into your finances. It drives your financial decisions and how you make them.

With a healthy and realistic money mindset, you’ll make better choices and be more financially resilient in tough times—like now.

Lately, inflation has been affecting all of us—In a BIG way!

Last year we hit 8.26% in the US. Even though we’re now under 5%, inflation feels like it’s hitting us hard at nearly every turn.

Alberta, Canada’s credit counseling agency, Money Mentors says,

Your money mindset defines how you think about money and influences how you save, how you spend, and how you manage your debt. It’s your core beliefs about money and your attitude towards it.”

This includes:

What you think you can and cannot do with money.
How much money you think you deserve.
How you believe you should manage your money (spend, save, share).
How you believe you should manage your debt.
Your ability to grow your wealth.
Your overall financial confidence.

Are you willing to make short-term shifts in your habits?

A data scientist friend of mine, Daniel Klein, wrote an article last year about rising gas prices caused by Putin’s antics. He pointed out that just a 5% to 6% reduction in consumption by each of us would eliminate the impact.

That’s as simple as eliminating one out of every twenty drives by grouping your errands and planning your routes. And hey, your GPS will even calculate the shortest way for you. And you can be sure it can find a better route when there is one. Yep, even better than your old favorite.

While you’re at it, get a tune-up and air up your tires. Seriously, a small investment can pay dividends well into the future.

And, what if we looked differently at that 5% I mentioned above?

Another way to look at 5% inflation is that what you used to get for $20, you now have to spend $21 if you want those same goods or services. Or… you could decide not to spend that dollar by delaying, adjusting, or eliminating your desires. Every CFO in every corporation will delay an expenditure if possible and there’s a reason for that—it’s one of their money-stretching tricks.

Sure, not every dollar you spend is discretionary. In fact, most aren’t. But your mindset around money is what matters most here. You have a say in the matter. You always have a choice.

Having more money to spend is a lot like losing weight.

Except for a few medical conditions, and regardless of what the diet du jour says, dropping the pounds boils down to…

Eating less,
Exercising more, and
Making better choices.

And with money, it comes down to a combination of…

Making more,
Spending less, and
You guessed it—making better choices!

Making more is always a nice option, although it can take some time and investment on your part. The most immediate opportunities are with numbers 2 and 3.

Sometimes higher prices of certain goods and services are enough to get us to spend less. And you can go further with it, too, by being more judicious in your buying. You know, exercise a little more scrutiny in your buying decisions.

Annualize it!

One of the best ways to clearly see the real impact of your daily discretionary spending is to calculate the total you spend on an item in a year’s time.

This technique lets you see in real numbers how much a year of something that you purchase daily actually costs you in a year’s time. Our fancy for lattes has been attacked to death, although it’s the perfect illustration. If you drop by your favorite coffee shop every weekday, a year of $5 lattes will cost you about $1,250.

Too close to the nuclear option for you to quit the morning caffeine hits? Developing a crafty money mindset will be able to see other options without losing the coffee kick. I’m going to leave that loop open to stimulate some neurons. Give it a shot and you’ll surprise yourself with what you come up with.

Puts your Java habit in a different light, doesn’t it?

Once this inflation thing broke loose, to me it began to feel like everyone and their sister was jumping on the it’s-okay-to-raise-my-prices-now bandwagon.

What if we respond where we can by jumping on the I-don’t-have-to-keep-buying-your-wares bandwagon? Can’t bring yourself to go that far? Okay, we also have the I’ll-buy-less option as well as the I’ll-wait-until-later option.

These are all insights that come from developing and caring for your money mindset.

Junk fees are the new “Want fries with that?”

No, I get it, there’s no direct correlation here. At least not until we realize that we’ve been beaten up and worn down to accept that the-price-isn’t-the-real-price. How’d they do that? By not even asking you.

I don’t know who started this latest way to slip another one by on the unsuspecting customer—like you and me.

We’re in a hurry and we don’t have time anymore. Ask questions. Push back. The “resort” they’re charging for is probably the new one they’re building in Toledo.

Sorry, that was a bit of a rant on my part.

My message is that strong and clear consumer resistance will be required to reverse deceptive practices like these.

Now is a great time to start working on getting your money mindset in the best shape possible while you have the pressure of rising prices to motivate you.

Volumes have been written about the economics behind inflation. And if it weren’t for the billions of puts, takes, and what-have-you’s, rising prices might be easier to fix.

So, it’s probably best to buckle in for a longer ride than we would like and adopt strategies to combat rising prices we can influence.

Be untucked.

p.s. Oh! One last thing, if you found this post helpful, be sure to share it with a friend. Use the Share Buttons at the top or the bottom of the post. Thanks, I owe you one.

p.p.s. Don’t worry, there are no hidden fees in this post.

p.p.p.s. If you liked this post, give this one a look.