Planning Points: Managing inflation

In the new year, people start talking about “turning the page” and “putting last year in the rearview mirror.”

It’s likely that 2023 will be remembered for many things, but at the top of the list will be the ongoing impact of inflation. Over the past two years, interest rates have moved dramatically higher and seem, at this point, to have peaked recently.

Here are three ways to approach the new year with a constructive outlook.

Learn from past experience

While inflation has continued to slowly dissipate, it still is having an impact on many people’s everyday lives.

It is important to understand what your priorities are and, if necessary, identify parts of your budget that may have been impacted more than others and focus on directing your expenditures to areas that will help improve your life the most.

When clients develop and refine their wealth plan with adjusted expenditures, they are able to quantify and assess the impact those expenses have on their lives. This allows them to bring identify their priorities and address them in a positive manner.

Early 2024 may be a good time to revisit that exercise and see if any recent experiences have reset some of your baselines and impacted your long-term goals.

Stay positive

While it may feel that inflation has restricted your lifestyle to some degree, it is always important to recognize the positive aspects of your life.

Positivity and gratitude are essential to overcoming many of life’s challenges. Looking at a glass that is half-full typically helps your overall approach to life.

Currently, a positive way to look at inflation is that while it still is present, the recent trends indicate it may be slowing down after a painful, two-year period.

Adjust, be objective

What is your 2024 going to be like?

As you look ahead, try to set aside the ongoing events and news. Instead look at the big picture.

What is important to you? Continue to pursue the things that make you happy. Inflation may have altered your path, but you can stay on track by making adjustments.

Understand where you are on your path and be persistent about fulfilling your goals. Whether it means retiring later or deferring a trip, be realistic and positive.

Understanding where you are coming from, where you are right now, and where you want to be in this year and beyond is the core of a good wealth plan.

Pete Alepra is managing director-financial adviser with RBC Wealth Management. Comments: (319) 368-7023; peter.alepra@rbc.com.