65% of Americans making $100,000 or more are very concerned about inflation
A customer shops for meat at a Target store on June 08, 2022 in San Rafael, California.
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Inflation is a real concern for many Americans – even those who earn six figures – and it influences decisions about how they spend their money.
96% of those high-income earners are concerned about inflation and 65% are “very concerned,” according to a Morning Consult/CNBC poll, which last week polled 1,000 American adults with at least $100,000 a year income.
The survey found that about 34% said they were in worse financial terms this year than last year, and 46% had to cut household spending due to inflation. If inflation worsens, 38% plan to cut spending.
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“It’s definitely a wake-up call,” said certified financial planner Shelley-Ann Iweka, senior director at TIAA.
“They fear what this will do to them in their future and how we will be able to manage our lifestyles if these are the costs right now.”
Consumers have been paying higher prices on everything, including gas, food and shelter, for the past year, and it’s costing families hundreds of dollars a month. In May, the Consumer Price Index, which measures the prices of consumer goods, jumped 8.6% year-on-year — the highest increase since 1981. The latest report is due on Wednesday.
According to the survey, the first thing on the chopping block for consumers is dining out, followed by outdoor entertainment and travel.
When will inflation slow down?
According to economists, it will take time to reduce inflation.
Jared Bernstein, a member of President Joe Biden’s White House Council of Economic Advisers, explained that inflation was caused by strong demand, a restricted supply chain, and the Russian invasion of Ukraine.
“Recent analysis shows that the demand portion is indeed lagging,” Bernstein said on Monday’s “Squawk Box” show.
Supply chain constraints remain. [but] He added, “They are pulling back in a big way. Putin’s price hike is something that falls into the mix, and it continues to be a strong constraint, affecting both the real economy and markets.”
Evaluate your financial situation
A woman shops for T-shirts in Rosemead, California on June 28, 2022.
Frederick J. Brown | Afp | Getty Images
To navigate higher rates, the first thing you should do is deal with your financial situation.
Look at your income and spending and the type and amount of debt you have.
“Our expenses, how we make our financial decisions, the choices we make, these are the only things we can control,” Iweka said.
She added that protecting your income through disability insurance coverage and your budget by supporting your emergency cash reserves are also important safeguards to put in place right now.
Look at ‘Needs’ vs. ‘Wants’
Once you see where the money is being spent, break it down into needs and wants, and start cutting back on the optional things, said CFP Carolyn McClanahan, founder and director of financial planning at Life Planning Partners in Jacksonville, Florida.
McClanahan, who is also a doctor, said that eating out all the time not only costs more money than cooking at home, but it’s also not healthy. When you’re at the grocery store, use coupons and comparison shopping to help you save money.
There will be nights when time is tight and you tend to order takeout for dinner. McClanahan cooks large portions on Sundays and puts meals in the fridge for those nights.
Using cars or planning car trips to reduce driving can help with gas usage, as can working from home a few days a week, if possible.
Also, check your credit card for recurring transactions such as subscriptions. You are advised to cancel the service if you are not using the entire subscription.
While it’s normal to worry about price hikes, you can’t control them — and worrying about it isn’t good for your health, said McClanahan, a member of CNBC’s Council of Financial Advisers.
“Just think of the things you can control,” she said.
“Making sure you spend your money in a thoughtful way is the only thing you can do to help lighten the outside world around you.”
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