With inflation at a 40-year high and world events conspiring to keep it high for some time yet, it is understandable that many people are increasingly worried about their investments and pensions.

The good news is that this is just the type of scenario that lifestyle financial planning can help with. There is no doubt that inflationary pressures have an impact on our savings, but with some careful planning and a little expertise on your side, it is perfectly possible to ride out the inflation bubble with your finances in great shape.

Here’s how lifestyle financial planning can help beat inflation.

What is Inflation?

We are all probably aware that inflation is merely the rate at which the goods and services we purchase increase in price. A little inflation is good for a healthy economy. It is a necessary evil that keeps the wheels of commerce turning.

However, when inflation is not kept under control, it can have a large impact on our day-to-day living expenses and our investments and pensions. This is what is happening in today’s financial climate, the impact of Covid and the war in Ukraine are major factors that have caused the inflation rate in Ireland to reach 6.7%.

Effectively, this means that the cash in our pockets will be worth 6.7% less in a year’s time. This is a concern when it comes to pensions and investments, as inflation is the base target that investments need to beat.

What is Lifestyle Financial Planning?

At Financial Architects, we understand that not everyone has the same goals. A Lifestyle Financial Plan is a highly tailored plan that is built around an individual’s current needs and future goals.

A full description of Lifestyle Financial Planning and how it works can be found in this helpful guide.

How can Lifestyle Financial Planning help beat Inflation?

A good lifestyle financial plan is a versatile tool that is designed to be “reactive.” This means that as circumstances change, the plan is easily altered to adjust to the changes.

High inflation is not a good thing in anyone’s book, but not all sectors suffer equally during inflationary periods. For example, periods of inflation can make an investment in the financial sector more lucrative as these tend to fare well when borrowing costs are rising.

The flexibility of a lifestyle financial plan is what helps it prosper when less versatile plans are suffering.

For instance, another example is if part of your plan involves having a large portion of cash put aside as an emergency fund. Cash is definitely not king in periods of high inflation! A lifestyle financial plan can help you by ensuring your cash assets are maximised through well-considered investments.

The Importance of Reviewing your Plan

Flexible financial plans like a lifestyle financial plan work at their best when regular reviews are undertaken.

This is truer than ever under the current circumstances. Reviewing your plan should be something that is done at regular intervals but also undertaken any time there are major changes to circumstances or the current financial climate.

During the review process, it can be determined which aspects of your plan will continue to prosper in the current circumstances and which may need to be tweaked.

This review process is the number one mechanism to help you fight inflation and keep your pensions and investment planning on the right track.

Conclusion

Inflationary periods can be worrying for those planning for the future or wanting to start planning. At Financial Architects, we can help make sure that your investments and future are as inflation-proof as possible.

If you are worried about your investments or retirement or just want some sound financial advice, contact us today for a no-obligation chat.

Financial Architects Ltd t/a Financial Architects is Regulated by the Central Bank Of Ireland.