Trying to fight inflation? Experts offer financial advice based on age | Business

Olivia Jurkovich paid $53 for a partial tank of gas one day this month. That’s $20 more than she normally pays to complete her Mazda SUV.

“I was just shocked,” said the 18-year-old, who grew up in Woodbury, Minnesota, and until recently worked in a coffee shop. “It’s crazy how much money I have to spend on gas, so I kind of have to cut back on other things.”

Inflation is causing headaches for all generations of consumers as inflation rates in the United States reach levels not seen in 40 years. Financial consultants say there are life-saving ways to tackle the pain, but the approach differs depending on age, career level, income and the level of anxiety that rising prices bring.

“It’s going to be hard to avoid sticker shock these days, but the best advice I can give is to get back to budgeting basics,” said Thrivent financial consultant Alex Gonzalez. “Review your cash flow and get down to business. … What is the amount of money coming in compared to going out? Inflation can force you to reprioritize so you can redirect your money to immediate and urgent needs.

Young adults should tighten their belts

Jurkovich’s mother, financial planner Dawn Dahlby, refused to increase the debit card allowances that Jurkovich and his sister, Sophie, 16, receive each month to cover expenses. Instead, the family got together to determine a new budget.

Jurkovich has since ditched the $5 lattes and $90 eyelash treatments, opting instead for a DIY kit from Target for $11. She also stopped eating out with friends and canceled buying a college sweatshirt to free up gas money.

While Jurkovich is mostly dependent on his parents right now, many of the same lessons apply to young professionals, said Dahlby, founder of Releve Financial in Woodbury. She offers practical advice for young workers on her website called Building Wealth and Worth.

“In this short time, if you can limit the instant gratifications that this younger generation is so used to,” there’s more to spend on gas, rent and heating bills, Dahlby said.

That’s sound advice, said Zheli He, an economist at the Wharton School at the University of Pennsylvania. Food and transportation consume more discretionary income for households headed by someone under 25.

“If you look at the price increases for those goods and services, they’ve seen the biggest increase,” she said.

For this reason, Gen Z is “most likely to be affected by inflation,” said Ginger Ewing, private wealth advisor at Ameriprise Financial. Those under 25 have more debt and are “more likely to live paycheck to paycheck”.

Although there are fixed costs such as student loans, rent and car payments, Dahlby recommends young adults, including her daughter, cut back on cafes, happy hours and restaurants (if they had revenues to be spent on these areas in the first place) .

“All of these areas are the hardest hit by inflation,” Dahlby said.

Ewing’s blueprint suggests Gen Zers pay off their smaller credit card balances quickly to free up money for more expensive gas, food and utilities. Another tip: consolidate student loans into one low-interest loan to free up cash. And don’t buy a car if you don’t have to. Prices are higher right now, especially on used cars, due to supply chain issues including a shortage of computer chips.

If possible, continue making 401(k) contributions as part of your work plan. But if you need to cut them briefly, pick a date and set a reminder on your cell phone to start them again, even if it’s only $50 a month or quarter until the budget is gone. released again.

Still pinched? Dahlby suggests young workers consider cutting gym memberships, expensive cable or cell phone benefits, and automated monthly payment services such as Where She also suggests looking for cheaper car insurance or rental options.

“I believe every person has the ability to look at the money they can waste and cut back,” Dahlby said. “These are actions they can take over the next three or six months to beat inflation. It’s not forever. Mid-career professionals should only make essential purchases

Checking out subscription services and canceling what you don’t use might be even more important for mid-career professionals, who are more likely to have racked up monthly automatic withdrawals for Netflix and the like.

The exercise is part of determining essential costs.

Technical brand developer Target Corp. Jennifer Gunderson, 45, and her husband Mike Swanson, 47, planned to replace 10 windows in their 80-year-old home in St. Paul, Minnesota. They replaced some windows six years ago at about $500 each, but the cost has gone up 175% since then.

“I had this fantasy of hoping that the new cost would be closer to $8,000,” she said. “But the quote was around $12,000.”

The other big purchase this year was going to be a new car. But with prices soaring, the couple also decided to continue riding their 14-year-old Honda. “We’re just going to get over this,” Gunderson said.

Postponing such expenses will help them with what they cannot live without. Like milk, one of Gunderson’s regular purchases that has risen in price. “He’s the one who got me. Honestly, it’s just shocking,” she said.

While millennials (27-41) and Gen-Xers like Gunderson (42-58) might fare better than their younger peers at paying for basic errands, they could still pay off student loans or face the high costs of raising children.

“Generally what I observe is that this is the group that is least affected by this short-term inflation spurt,” Ewing said. “They have more disposable income. They can handle it better and change their way of life more easily than adults who are just starting out.

Perhaps the most important thing for this group is to assess what purchases are absolutely necessary. This group tends to be in “acquisition mode”, debating whether to replace big-ticket items such as cars, appliances and furniture, said John Dooney, director of strategic research at the Society for Human Resources Management.

Some other ideas: Downsize to one car to save on insurance and other costs. Increase insurance deductibles on cars or homes to reduce monthly premiums.

Other advisers note that money can be freed up instantly simply by changing a regular Roth IRA or Roth 401(k) contribution — which is now taxed — to a traditional IRA or 401(k) that defers taxes until later.

While these savings may not seem significant on their own, together they can make up a large portion of the higher cost of gas and groceries.

Thrivent Financial consultant Eva Stukenberg refers clients and friends to the company’s free online Money Canvas program, which helps find cost savings. Most banks and credit card companies also analyze consumer habits for free.

Baby boomers need to stay the course

The Wharton School economist fears that the current inflationary climate will hurt retired baby boomers.

“For older households who live on fixed incomes and receive a set level of cash flow, their purchasing power will be eroded by inflation,” he said.

It helps that retired baby boomers get a 5.9% cost of living adjustment in their 2022 Social Security checks.

This age group also likely has more medical expenses included in basic monthly expenses. Kendall Munson, 66, helps her friends find discount coupons for prescription drugs on Where and compares pharmacy prices using

The first time the retired family resource coordinator at Children’s Hospital used GoodRx, his allergy medication costs went down from about $20 to $4. Last month, he used GoodRx to help an elderly friend reduce the cost of her prescription from $150 to $41.

“I felt so good about it,” Munson said. “Until you need these services, you just aren’t looking for them.”

But with inflation soaring, now is the time, said Munson, who has embraced early happy hours, matinees or sharing a meal with a friend as ways to combat grocery bills. “soaring”.

“Saving money in some areas allows you to balance out rising costs in others,” he said.

The idea is not to increase budgets or plunder pension funds just to cope with rising prices, financial advisers say.

Thrivent’s Stukenberg tells clients nearing retirement to look for hidden, unused benefits at work that can free up money each month. She also directs struggling customers to the National Council on Aging’s free BenefitsCheckup website to find programs that can help reduce bills in all sorts of areas.

La Donna Meinecke hopes to retire in two years from her longtime job at HealthPartners, so the Minneapolis resident consolidates car errands to save gas, figures out which magazine subscriptions and beloved cellphone apps cancel, and scours the Sunday flyers for deals.

This month, buy one, get one free for chicken and eggs at local grocery stores, saving him $8, enough for gas at Costco, where Meinecke also makes buy in bulk to save on groceries.

“I can get out of this. But I just have to start thinking about inflation and really start planning for my retirement,” she said. “You have to be aware.”

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Sara R. Cicero