Regardless of age, the recent rise in inflation is making life more expensive for everyone. For millennials, the effects of inflation—which reached an overall rate of 8.5% in March, have been particularly devastating.
According to a recently study, consumers aged 35 to 44 are experiencing inflation at a higher rate than other age groups, with those 25 to 34 close behind. Millennials typically dedicate a greater share of their spending than other generations to specific categories of expenses that have been increasing most rapidly, such as rent and home purchases, vehicles, and fuel. Grocery bills are getting larger too, creating a growing burden for big families.
What Can You Do?
Trimming nonessential spending can help free up extra cash to cushion against rising prices—and it doesn’t mean sacrificing everything you enjoy. If you have a pricey gym membership or pay for streaming services you’ll probably use less during the summer months, consider pausing them for a while.
Reduce Debt. Increase Savings.
Don’t overlook the power of paying off debt and increasing the amount you commit to savings each month. As short-term interest rates rise to help battle inflation, work on paying down credit cards and other high-interest debts. If you have a retirement plan, be sure to keep making regular contributions and consider talking to the plan’s administrator about how to best allocate funds to beat inflation.
Because millennials have more time for their retirement funds to grow, they should consider allocating their contributions to stocks that generally outperform inflation and put the rest into short-term corporate bond funds.