5 tips to protect your money during high inflation

There are no certainties in life, but the best way to prepare for the unexpected is to have some money set aside, just in case. You should set aside a certain amount of money every month to create a financial buffer, or an emergency fund. A good goal to strive for is saving for three to six months of expenses, but don’t feel like you’re behind if you haven’t saved that much yet. Saving a small amount on a regular basis can make a big difference in the long term, even if it’s just $25 or $50 a month.

You’ll also want to be sure your emergency fund is easy to access. A good product to consider is a high-interest savings account. It offers just that, plus you'll earn interest on what you save.

If you don't have an emergency fund, prioritize setting one up. While you’re working on saving and need an alternative in the meantime, consider a low-interest credit product like a Home Equity Line of Credit or personal line of credit. Having access to low interest funds can be a better option than charging your credit card if your sink suddenly starts leaking.

A well-diversified portfolio is one of the best ways to manage the impact of rising inflation and rising interest rates on your investments. A balanced portfolio is made up of different asset classes, including traditional stocks and bonds, which help to reduce risk during inflationary periods.

Now is a good time to review your portfolio mix and make sure it still reflects your risk tolerance, time horizon and current environment.

As your goals and spending habits change, it's always a good idea to review your budget. In times of high inflation, it makes even more sense. Look at your spending and consider eliminating expenses you may not even miss — like an unused gym membership or subscription services, for example.

You can still go out or spend money on things that bring you joy, but revaluate where your money could be better spent and cut out a few unnecessary expenses. That will immediately boost your cash flow.

Although inflation doesn’t directly influence mortgage rates, rates typically rise during periods of high inflation. If you’re a first-time home buyer, you need to choose which type of mortgage is best for you: fixed or variable.

Interest rate hikes don’t directly impact fixed mortgage rates, so the mortgage rate and your monthly payment will stay the same for the mortgage term. With a variable-rate mortgage, your interest rate and monthly payments will likely rise and fall throughout the length of the term.

Fixed mortgage rates provide stability and may help ease budget concerns. However, if the posted fixed rate is a lot higher than a variable mortgage rate, a variable mortgage may save you money over the term.

If you're in the market for a new mortgage, or if your mortgage is up for renewal, shop around for the best rate to help offset the costs associated with inflation and rising interest rates.