Rising prices can cause a lot of anxiety, particularly for younger investors who may be experiencing significant inflation for the first time. Retirement Director Ben Rizzuto outlines simple steps to help ease the stress and stretch your dollar amid this hopefully temporary inflation spike.
I was recently taken in by a New York Times opinion piece titled “The Year of Inflation Infamy” by Paul Krugman. In it, he discussed the reasons for and potential trajectory of our current bout with inflation. The piece was quite informative, but what really struck me was his remembrance of Hamburger Helper. He and his college roommates used it to get more out of their meals and money as the price of ground beef in 1973 had increased by 49% in just two years’ time.1
For those of you who aren’t familiar with it (perhaps because you weren’t even born in 1973), Wikipedia describes Hamburger Helper as follows:
Hamburger Helper is a packaged food product from General Mills, sold as part of the Betty Crocker brand. It consists of boxed dried pasta, with powdered seasonings contained in a packet. The product line also features other starches, such as rice or potatoes. The contents of each box are combined with browned ground beef ("hamburger"), water, and, with some varieties, milk to create a complete one-dish meal. There are also variations of the product designed for other meats, such as "Tuna Helper" and "Chicken Helper.2
Sounds delicious, right??
Not only do many younger investors not know what Hamburger Helper is, they haven’t truly experienced inflation as we are seeing it today, nor do most understand how it occurs.
Inflation can be caused by several factors, including the expectations of economists and the market or fluctuations in commodity prices (think oil and thus gas prices). In many cases, it is simply the result of too much money chasing too few goods.
I think more important than the reasons why inflation occurs, however, is the other takeaway I had from Krugman, who noted in his op-ed, “inflation is an emotional subject.” It doesn’t matter how much money you have; we all feel our heart rate quicken when we watch our grocery store tab increase with every beep of the scanner or feel the pit in our stomach when we get to the end of the month and find a smaller balance in our accounts.
That anxiety could lead us to stress eat Hamburger Helper like Paul Krugman or make bad financial decisions. Instead of letting your emotions get the best of you, there are a few steps you can take that may help ease the impact of inflation on your financial security.
Review/update your budget. The beginning of the year is a great time to review your budget. We’ve developed a simple budget worksheet that will allow you to review what’s coming in, what’s going out, and where improvements can be made.
Negotiate prices. Once you’ve gone through your budget, take the time to call your cable, streaming, Internet, mobile phone, gym and any other company you pay on a monthly basis to see whether you can negotiate a lower fee.
Find your Hamburger Helper. While it might not be actual Hamburger Helper, there are ways to get the most out of the products and services you utilize, thereby stretching how far your money goes. Think about how you can be creative with meals, make sure to freeze items before they’re out of date, plan meals ahead and try to limit eating out or ordering delivery.
Take a spending break. The holidays are over, Omicron is raging across the country and the weather in many areas of the country will be wintry for the foreseeable future. Why not take some time over the next month or two to focus on some (less expensive) forms of entertainment? Utilize your Netflix subscription to its fullest, explore your local library, cook more at home and consider giving “Dry January” a try if you indulged over the holidays.
Review your investments. The purchasing power of your dollars is decreased by inflation, so it’s important to consider how your assets can make up for this over the long term. Therefore, investing in assets that could appreciate in value is another way to potentially combat inflation. This could be equities, real estate, or other assets that are likely to grow – not only because of inflation, but because you’re young and have time on your side.
Money is an emotional subject, and inflation can have a strong impact on the emotions we feel as we spend our money. However, it’s important to understand that inflation is a part of a functioning economy. So even though this may be the first time that younger investors have had to cope with it, this certainly won’t be the last time inflation rears its ugly head. And while rising prices can increase the anxiety that many of us have around money issues, it’s important to remember that emotions can lead to bad financial decisions.
As I always say, short-term emotions don’t lead to long-term financial success, so consider taking the steps outlined above to help yourself better understand your financial situation and create a plan for this hopefully temporary inflation spike. Making just a few small changes can help decrease your stress and put you on a solid path for what we all hope is a great 2022.
1 Krugman, P. “The Year of Inflation Infamy.” New York Times, December 2021.
2 Wikipedia.com entry for “Hamburger Helper.”