1. Increase your earning power

When inflation occurs, you can think of it in two basic ways. One is that prices are increasing, another is that the dollar is losing value. Either way you look at it, earning more money is a pretty safe solution.

If you’re out of work or one of the millions of people leaving their jobs in the Great Resignation, consider using whatever extra downtime you have to develop your skill set and position yourself for a bigger paycheck.

You can use those skills to start a freelance side hustle, or check out the latest job postings if you think it’s time for a job change with a larger salary and more opportunities to advance.

2. Play the stock market

Stocks have historically outperformed inflation to a significant degree, making them one of the strongest hedges against it.

You can use inflation to your advantage by investing in sectors of the economy that may benefit from rising prices, including food, technology, building materials and energy.

Many innovative apps can help you invest in the market. Weigh the pros and cons of each, find the right one for your financial needs and get in the game.

3. Get precious

Fears of inflation have always been good to hard assets such as gold and silver. Both commodities performed well over the past five years, with the value of gold rising by 52% over that span and silver’s increasing by about 49%.

You can hold precious metals directly by purchasing coins or bars, or you can take a more hands-off approach and invest in exchange-traded funds, or ETFs, that hold actual gold and silver.

There’s a very popular app that can help you do that.

4. Capitalize on the scorching real estate market

Real estate has proven to be one of the most reliable long-term investment plays you can make. The U.S. housing market has been on a serious upward trajectory in recent years.

If you’re ready to move, start comparing mortgage rates today and score yourself the best deal possible. Rates are still historically low, and the average for a 30-year loan is under 3% again.

The lowest mortgage rates tend to go to the borrowers with the highest credit scores, so do what you can to bring it up a few notches.

5. Adjustable rates are not your friend

When inflation rises, so do interest rates. If you’re carrying any adjustable-rate debt, like a credit card balance or home equity line of credit, an uptick in inflation will result in higher interest charges.

That is especially true for mortgages. If you have an adjustable-rate mortgage, you may want to talk to your lender about refinancing and opting for a fixed rate instead.

That’ll guarantee that you’ll pay the same interest rate until you decide to sell your home — or refinance again at an even lower rate.

6. Bring down your debt

If you’re carrying significant debt, but a mortgage refi or rate swap isn’t suitable for you, there are still options to reduce the interest you’re paying creditors.

One proven method for slashing the cost of your debt is to take out a lower-interest debt consolidation loan.

By rolling all of your high-interest debt into a single loan, it’ll be much easier to budget around a single payment to one lender rather than several.

7. Cut all the remaining costs you can

You probably noticed by now that most of the suggestions here involve spending money. But cutting expenses is also an excellent hedge against inflation.

If you haven’t checked insurance prices lately, there’s a good chance you’re paying more than you need to, so do some comparison shopping. You may find a better deal on your car insurance or save hundreds of dollars by comparing rates on homeowners insurance.

And don’t turn up your nose at coupon clipping, because even Buffett does it. A handy tool scans the internet and finds you the best online shopping prices.

8. Stay the course

Not everyone believes inflation’s recent spike is a sign of long-term problems. Buffett himself notes that Americans still have money to spend.

"People have money in their pocket, and they pay the higher prices,” he told his Berkshire Hathaway devotees at a meeting in May.

So if you’re comfortable enough with your current finances to absorb the higher prices, you may want to ignore the hype. Financial well-being isn't always about cutting costs. You can generate some extra income in the stock market using a popular app that helps you invest your "spare change".

About the Author

Clayton Jarvis

Clayton Jarvis


Clayton Jarvis is a mortgage reporter at MoneyWise. Prior to joining the MoneyWise team, Clay wrote for and edited a variety of real estate publications, including Canadian Real Estate Wealth, Real Estate Professional, Mortgage Broker News, Canadian Mortgage Professional, and Mortgage Professional America.

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