5 Ways Millennials Can Creatively Budget To Fight Inflation

Millennials successfully fighting inflation are employing strategies that go beyond following standard budgeting advice. Among the most productive workforce in the history of the world, millennials are leaning into their strengths as high achievers to adjust budgets and lifestyles. 

Here are the key focus areas that allow millennials to fight inflation.

The advice “earn more money” is often easier said than done. But, it can be done if you start exploring passive income opportunities or take classes that allow you to move into a career that pays more. 

Danielle Miura, CFP and founder of Spark Financials, said millennials should focus on establishing ways to increase their income. Doing this, as opposed to focusing on adjusting budgets, helps millennials maintain their purchasing power. 

“Finding a new position with a higher salary or asking for a raise can create more income and be a confidence booster for those worried about maintaining their lifestyle with their current budget,” Miura said.

If you need to reexamine your budget, Emily G. Irwin, managing director at Wells Fargo Wealth & Investment Management, recommends determining if there are opportunities to adjust discretionary spending downward. Irwin uses the example that millennials may consider negotiating with discretionary providers, like gyms or cellphone providers, to learn more about negotiable promotions for “new” customers. 

While you’re at it, right now might be the perfect time to start holiday shopping. Irwin said while the holiday season is still several months out, millennials may get a jump-start on shopping now. Starting now means avoiding hefty bills at the end of the year. 

If you plan to make a significant purchase this year, Irwin recommends evaluating big purchases through two lenses of consideration. 

First, is it possible to invest in quality products? Pay attention to purchases that require less maintenance or have lower ongoing expenses. These purchases often last longer and there is a reduced likelihood you may need to buy a replacement in the near-term while prices continue to rise.

Second, ask yourself if it’s possible to defer the purchase. Do you “need” a new car or refrigerator? Millennials will likely know if they need to purchase a replacement now or if there’s wiggle room to wait awhile longer.

“Reconsider or implement an investment strategy that performs better during inflationary periods, such as being weighted more heavily in specific industries such as banking, consumer staples, energy, utility and healthcare (as opposed to fixed income),” Irwin said.

Finance and lifestyle blogger Pri Gupta is part of a millennial couple who achieved an early retirement goal in 2021. Gupta said there’s no way inflation will force the couple back into a 9-5 routine and recommends investing any savings in index funds.

“There’s a high likelihood that your investment will continue to grow in value as inflation increases the cost of living,” Gupta said.

Another tried and true investment sector during high inflation is real estate. Sachin Jhangiani, co-founder of Elevate Money, said real estate offers many benefits to its investors.

“Investors are backed by a real asset and have far less volatility than the stock market or cryptocurrencies,” Jhangiani said. “Real estate also provides investors with the potential to earn passive income. Typically, the property will go up in value over time and it’s proven to be a good hedge against inflation.”

In addition to implementing an investment strategy fitting for an inflationary period, Irwin recommends millennials use this time to reassess their savings strategy. 

Cash should be at the forefront of your reassessments. “Setting aside cash may seem like a ‘safe’ strategy, but cash is more susceptible to inflation/purchasing power risk than those with more diversified investments,” Irwin said. 

Jhangiani also recommends getting out of cash, or making sure this cash is kept in a high-yield savings account. 

“As inflation rises, the value of money declines, which means you lose if you hold onto it or keep it in a low yield savings account. If you’re holding onto your cash and looking for the best next step to take, seek out ways to balance your portfolio and stay away from keeping all of your eggs in one basket,” Jhangiani said.

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