65% of Americans who earn $100,000 or more are very concerned about inflation
A customer shops for meat at a Target store on June 8, 2022 in San Rafael, California.
Justin Sullivan | News from Getty Images | Getty Images
Inflation is a real concern for many Americans – even those earning six figures – and is affecting decisions about how they spend their money.
According to a Morning Consult/CNBC survey last week of 1,000 US adults earning at least $100,000 a year, 96% of these high earners are concerned about inflation and 65% are “very concerned.”
About 34% said they are worse off financially this year than they were a year ago, and 46% have had to cut household spending because of inflation, according to the survey. If inflation worsens, 38% plan to cut spending.
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“It’s definitely a wake-up call,” said certified financial planner Shelly-Ann Eweka, senior director at TIAA.
“They fear what it will do for them in their future and how we will be able to manage our lifestyle if that is the current cost.”
Consumers have been paying higher prices for everything over the past year, including gas, groceries and housing, and it’s costing homes hundreds of dollars more a month. In May, the Consumer Price Index, which measures the prices of consumer goods, rose 8.6% year-on-year – the highest increase since 1981. The latest report is due out on Wednesday.
The first thing on the chopping block for consumers, according to the survey, is dining out, followed by entertainment outside the home and travel.
When will inflation slow down?
It will take time to lower inflation according to economists.
Inflation was caused by strong demand, a constrained supply chain and the Russian invasion of Ukraine, explained Jared Bernstein, a member of President Joe Biden’s White House Advisory Council.
“The most recent analysis shows that the demand part is actually declining,” Bernstein said on Monday in the “Squawk Box”.
“The constraints in the supply chain are still in place, [but] they are declining significantly,” he added. “Putin’s price hike is very strong in the mix and that remains a strong constraint weighing on both the real economy and markets.”
Assess your financial situation
A woman shops for t-shirts on June 28, 2022 in Rosemead, California.
Frederic J Brown | AFP | Getty Images
In order to control higher prices, you should first get your financial situation under control.
Consider your income, expenses, and the nature and amount of your debt.
“Our spending and how we make our financial decisions and what decisions we make, those are the only things we can control,” Eweka said.
Protecting your income with disability insurance and your budget by topping up your emergency reserves are also important safety precautions to take now, she added.
Once you see where you’re spending money, break it down into needs and wants and start reducing things that are optional, CFP said Carolyn McClanahan, founder and director of financial planning at Life Planning Partners in Jacksonville, Florida.
In fact, not only does eating out cost more money than cooking at home, it’s also not as healthy, said McClanahan, who is also a doctor. Use coupons and price comparison at the grocery store to save money.
There will be nights when time is short and you’ll be tempted to order dinner to go. McClanahan cooks in bulk on Sundays and puts meals in the freezer for those nights.
Carpooling or scheduling car trips to minimize driving can help with fueling, as can working from home a few days a week if possible.
Also, check your credit card for recurring transactions like subscriptions. If you don’t fully use the subscription, cancel the service, she advises.
While it’s natural to worry about rising prices, you can’t control them — and worrying about it isn’t good for your health, said McClanahan, a member of the CNBC Financial Advisor Council.
“Just think about the things you can control,” she said.
“Making sure you’re spending your money wisely is the only thing you can do to mitigate the outside world around you.”
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