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Inflation isnt just about rising pricesits also about lasting changes that can permanently impact your financial future.
Additionally, inflation can impact your savings and investments in unexpected and unpleasant ways.
Understanding these effects and learning how to protect yourself are important for ensuring yourfinancial healthdown the road.
Over time, this can permanently affect your ability to afford goods and services, he said.
How To Combat It
Shirshikov said you should invest in assets that outpace inflation.
For example, investing in adiversified stock portfoliocan help maintain and grow purchasing power.
Shirshikov also recommended adjusting your spending habits.
Regularly review and adjust your budget to account for rising costs, he suggested.
This might involve cutting discretionary spending or finding more cost-effective alternatives.
Fixed-Income Strain
Shirshikov said that people on fixed incomes, such asretirees, are particularly vulnerable.
Shirshikovs first suggestion is to invest in inflation-protected securities.
Another way to counteract fixed-income strain, according to Shirshikov, is to diversify income sources.
Consider part-time work, freelancing or other income-generating activities to supplement fixed income, he suggested.
Additionally, investment income from diversified portfolios can help mitigate the impact.
Look for high-yield savings accounts orcertificates of depositthat offer better interest rates, recommended Shirshikov.
Credit unions and online banks often provide more competitive rates.
Shirshikov also recommended increasing your investment allocation.
Maintaining a balanced portfolio with a mix of assets can provide both growth and security.
Bonds, in particular, suffer as rising inflation erodes the fixed returns.
Shirshikov recommends diversifying your portfolio.
A diversified investment portfolio can reduce risk.
Include a mix ofstocks, bonds, real estateand other assets to spread exposure, he said.
He also said its important to regularly rebalance your portfolio.
Ideally, there are emergency savings that can be tapped into if necessary for one-off unexpected expenses.
Cisneros said toadjust your budgetor spending plan accordingly.
Review and check in on what expenses are necessary and not, she said.
This can help identify where you could cut if numbers get tighter.
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