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Boise financial planner explains implications of recent inflation

Recent inflation rates are translating to higher prices on just about everything. So, what's the best way to protect your finances?

BOISE, Idaho — Inflation, inflation, inflation! It’s in headlines everywhere this week, but what does it mean?

“Well, it’s just when there are a lot of people trying to buy a limited amount of things. Then, whoever is supplying those things gets to raise prices because they can say, hey I’ve got the monopoly on gas or bread and I can charge a bit more,” said Nic Daniels, a Financial Advisor for Tree City Advisors in Boise.

Inflation jumped in November by almost 7%, by the fastest rate since 1982. Daniels explains that the current situation is nothing shocking and is a result of many factors that have been building for years.  

“What COVID has done and what this pandemic has done is basically kind of given the opportunity for inflation to sort of catch up and so we are seeing, the news came out today, 6.8% year over year inflation from November of 2020, well it is sort of catching up to us now,” Daniels said.   

There isn’t one reason as to why America is seeing elevated inflation. Supply chain issues, wages, and the global economy are a few main ones. Really important though, how do we get away from inflated prices on just about everything?

“It will take a while for the supply chain kinks to get worked out and it is not because any one politician is going to talk to one politician over here because businesses that wasn’t to stay in business and make money by providing the goods, the raw material, or the manufactured good people are demanding, they are going to talk to each other and figure out how to get those deliveries on-time and in a cost efficient manner. It will work itself out, but it could still take another 18-monhths or so,” Daniels said.   

So, what does the average Idahoan need to do now? Is there anything? Well, with more expensive goods and lagging wages, Daniels says take a step back and look at your financial situation.

“Keep it real simple, you need to dial in. What are your expenses? What are the areas that you could hit the pause button on, maybe for a while just to have a little bit more cash cushion on the side because we are feeling it. Every time you go to fuel up your vehicle you see it, every time you go to the grocery store you see it, every time you are paying your utility bills you are seeing it right now. You might just have to make some temporary short-term changes,” Daniels said.   

Daniels says it is a good time for people, especially young adults, to go through their finances.

“Yeah, adulting is not always fun but you got to do it. The thing is, if you are proactive it is far easier to make the right decisions now instead of being reactive,” Daniels said.   

What about Idahoans that are keeping a close eye on their investments and retirement? To be honest, people will see media reports about the economy and panic thinking it’s time to act. Daniels says avoid that train of thought.

“Honestly, stay the course. Over the long-term you are going to be very glad that you didn’t react to the news and the media about inflation and you just stayed the course, investing on a monthly basis for that 15 to 20-year retirement timeline that is ahead of you. Stay the course, emotions are incredible servants, but they are terrible masters. So, don’t let your emotions master you. Just stay the course with investing and financial planning and most likely you will end up alright,” Daniels said.    

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