TIPS AND TRICKS

Want to Insulate Yourself from Inflation? Question Your Cash

If your money is sitting in a bank account paying zero interest, or close to it, you’re not really treading water. When consumer prices are rising at a 6.8% annualized rate, as they are now, your bank balance is effectively losing about 6.8% of its value a year.

As Brent Weiss, co-founder of the virtual financial planning firm Facet Wealth succinctly puts it: “Cash is a scary place to be right now.” Even when the Fed raises rates, it usually does so slowly. In the meantime, Weiss says you may want to rethink how much money you’re leaving in a bank account that’s losing the footrace with inflation. For younger parents in particular, anything beyond what you need for emergencies or near-term purchases — the down payment on a home, for instance — is probably better to invest.

For someone who’s been in their job for a long time, Weiss says you probably only need enough in your bank account to cover three to six months of expenses. Those in more volatile careers or starting their own business might want to increase that a bit, setting aside six to nine months’ worth. But money that you know you won’t need for five to 10 years can be put to more productive use.

“If you have excess cash, you have to ask yourself why,” says Weiss. You may want to expose that extra money to risk if it means countering inflation, he says.

Here are some more important tips on how to get ahead of rising interest rates.

TIPS AND TRICKS

Lower the thermostat, fall asleep faster.
When you’re tucking into bed, warm and cozy may sounds ideal. But 79% of people say cooler temps are where it’s at for better sleep, according to a survey by the National Sleep Foundation. So where should you set your digital dial? Experts recommend between 60 and 67 degrees Fahrenheit (about 10 degrees colder than most homes are set). The reasoning? Your body temperature naturally dips a few degrees at night to slow you down for sleep; a cooler room may trigger the same get-ready-for-bed signals in your brain.

Here are 13 more tips to help you conk out faster at night.