Slow and steady inflation is an expected part of a healthy financial system — but what we’re experiencing this year is not slow and steady.

High inflation means higher prices everywhere from the grocery store to gift shops, it leads to higher interest rates, and it can cause a lot of confusion about the best choices for our financial future.

Inflation is the value of currency dropping over time. There are a lot of interesting economic concepts that detail why this happens, but ultimately if inflation happens too suddenly it can put a huge burden on the consumer.

Nobody likes seeing the price of their favorite cereal going up, and it’s even worse when the price of everything else goes up along with it. But that's the reality of high inflation. When the dollar is valued less, prices everywhere are going to rise.

Budgets are hit hard during high inflation, especially for those that need to count every dollar they spend. If high inflation puts you in a tight financial squeeze, the best way to respond is to take a hard look at your spending and find non-essential, flexible expenses you can cut.

Food is essential, caviar is not—hobbies are flexible, your mortgage or rent payment is not.

You might find things to cut that you won’t even miss like unused online subscriptions or that gym membership you never use.

You might need to cut things you enjoy like YouTube without ads, unlimited data phone plans and eating out.

A big problem with high inflation is that our expenses get bigger, but sometimes our wages don’t. In an ideal world, our paycheck would automatically increase as the dollar loses value, but the reality is that companies are not required to raise wages to match inflation (and often don’t).

You also may be able to find extra forms of income to increase your budget. This could take longer than cutting expenses, but finding extra sources of income can strengthen your budget while making fewer cuts.

And it could be a good time to consider earning more money by doing something you’re passionate about on the side. If you can comfortably handle rapidly rising prices, you could probably risk doing your stand up at an open mic, send that novel to a publisher, or make your reality tv show tryout tape. You could also turn that side project into income, like selling the candles or jewelry you make for your friends and family into a side hustle. Or, start selling things online that you no longer use in your home.

While we have little control over when inflation will strike, we can control how we respond to it. High inflation and rising prices is a bummer for everyone, but do what you can to turn those over-priced lemons into reasonably-priced lemonade.

Need more ideas or help revising your budget to handle high inflation? Contact us anytime to set up a free consultation with one of our certified financial counselors.