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Inflation affects everyone, but differently. That’s why it makes sense to think about how inflation impacts your personal finances. After all, the most common measure of inflation, the Consumer Price Index (CPI) really only tracks inflation for the average urban consumer.
And nobody in the Sarasota area is just average!
“You can’t control inflation. But you can make financial decisions designed to reduce its effects.” – John B. Leeming, CFP ® President at JL Bainbridge
Finding your personal inflation rate will help you manage your finances more effectively than just thinking of inflation as an average, slightly relevant number. In fact, you don’t need to think of this as a specific number. Instead, think of it as an exercise to evaluate which areas of your budget are most exposed to higher inflation.
Review your expenses and look at wide categories such as real estate, travel, healthcare and entertainment. Spending priorities will vary by person, even within the same family.
Remember to revisit your inflation-related information regularly, especially when economic factors change or for major life changes such as buying a house or funding a child’s education.
Knowing your personal inflation profile is crucial for smart financial planning. It helps you predict how much additional you’ll need to save based on rising costs. If certain expenses, like healthcare, are increasing, you might consider investing in those areas to benefit from their growth.
Understanding your inflation rate also helps you make more informed decisions about spending and saving for the long term, ensuring your budget fits your retirement planning needs as well.
JL Bainbridge advisors are fiduciaries. They are required by the SEC to act first and foremost in their clients’ interests.
JL Bainbridge offers free hour-long financial reviews with one of its Family Wealth Advisors. To learn more about JL Bainbridge or to set a time for your Free Financial Review, call (941) 356-3435 or visit jlbainbridge.com.
Here are three of JLB’s “Family Wealth” blogs that you might like to read:
Women and the Great Wealth Transfer
