Sneaky ways inflation affects your money in 2023

By now, you’re probably familiar with the more obvious ways inflation affects your finances. Your money doesn’t go as far at the grocery store, for example. Credit card and other variable-rate debt is getting more expensive as the Federal Reserve raises short-term interest rates to combat inflation. Rates are also rising, albeit more slowly, on savings accounts.

But other ways inflation helps or hurts have gotten less attention. In my latest for the Associated Press, learn some of the major changes to watch for in 2023.

Thursday’s need-to-know money news

Today’s top story: How much it costs to adopt a child. Also in the news: Why money is so confusing, and the true history of credit scores.

How Much Does It Cost to Adopt a Child?
The adoption process can be long and cost anywhere from less than $1,000 to more than $50,000.

Why Is Money So Confusing?
Understanding some of the common barriers, along with strategies to cope, could help you finally get a handle on your finances.

The True History of Credit Scores
Critics contend that the system still has discriminatory effects.

Why is money so confusing?

Managing money is an essential life skill, yet most U.S. adults would fail a financial literacy test. Consider the results of a survey meant to measure financial literacy, called the TIAA Institute-GFLEC Personal Finance Index. On average, U.S. adults correctly answered only 50% of its financial literacy questions in 2022.

In other words: If you find money confusing, you’re far from alone. But the reasons you’re baffled may have more to do with how our brains work than how money does. In my latest for the Associated Press, understand what could help you to get a handle on your finances.

Wednesday’s need-to-know money news

Today’s top story: Here’s which airline rewards program gives the most value. Also in the news: The most valuable hotel rewards program in 2022, 5 steps to strengthen your finances, and despite higher wages, inflation gave the average worker a 2.4% pay cut last year.

Here’s Which Airline Rewards Program Gives the Most Value
Alaska, Frontier and Southwest lead the way on cash value per mile.

The Most Valuable Hotel Rewards Programs in 2022
Radisson Rewards America and World of Hyatt lead the way on key measures of value.

5 Steps to Strengthen Your Finances in 2022
In 2022, setting grand financial goals may not be realistic for every budget, but there are still smart steps you can take to shore up your finances.

Despite higher wages, inflation gave the average worker a 2.4% pay cut last year
Inflation grew 7% in December from a year earlier, the U.S. Department of Labor said Wednesday.

Thursday’s need-to-know money news

Today’s top story: 4 ways to fortify your finances against natural disasters. Also in the news: What ‘Medicare For All’ could mean for your healthcare, 8 times to rethink asking for a credit card product change, and the risks of crypto loans.

4 Ways to Fortify Your Finances Against Natural Disaster
A “go bag” for your money.

What ‘Medicare for All’ Could Mean for Your Health Care
The much-discussed proposal calls for universal single-payer health care. If enacted, what would it mean for you?

8 Times to Rethink Asking for a Credit Card Product Change
Switching to a different credit card can make sense in many circumstances. But here are times when it’s not the best option.

Crypto Loans Unlock Cash, but They Carry Risks
Borrowing against your crypto is possible, but its unstable value makes it a risky option.

Stop counting other people’s money

Your neighbor pulls up in a sweet new ride. Your co-worker announces she’s taking yet another trip abroad. Your best friend upgrades to a bigger house in a better area of town.

You’re pretty sure these people don’t make a lot more than you do.

So how are they able to spend that kind of money?

Maybe they’re up to their ears in debt, or they’re trust fund babies, or they’ll never be able to retire. Or maybe they’ve figured out the secret to money, which is: You can have anything you want. You just can’t have everything.

The new car, that house and that exotic trip are the shiny end results of a series of decisions hidden below the surface. What we don’t see, typically, are the trade-offs – or their consequences.

In my latest for the Associated Press, why you need to focus on your own finances instead of counting other people’s money.

Chasing a dream? Fix your finances first

Mark Howard of Basalt, Colorado, earned a hefty six-figure income during his 25-year career in financial services. His dream, though, was to teach high school — a job that paid about $40,000 a year.

When he floated the idea past his wife and business partner, Danielle Howard, her reaction was surprise and unease. He was 54, she was 44. They had two kids in college, a big house and a lifestyle based on their $250,000-plus income.

But her experience in the life planning branch of financial advice taught her to ask searching questions of clients and follow up on their answers.

In my latest for the Associated Press, why it’s important to fix your finances before chasing your dream.

Q&A: To help elderly dad hold off mooching adult kids, call in the experts

Dear Liz: My dad, age 90, needs personal care and I am trying to get him to move out of his house to a senior residential place. He is in agreement, but it is taking a long time to make this happen. He owns his home free and clear and, along with the sale of his home, has enough financial assets to cover these costs.

The problem is my two sisters’ husbands, who overspend and are in debt. These two guys continue to pressure my sisters to ask my dad for money for such things as their mortgages, expenses for their children and credit card debt. My sisters are not just starting out — they are in their 50s! Not only that, when I ask them for help with our dad, they flake out on me. I’ve told them that the financial assistance can’t continue because Dad will need his money to pay for his care.

I feel that my sisters’ and their husbands’ behavior is senior financial abuse. I read that this situation happens a lot in families, where the kids will milk an elderly, wealthy, sympathetic parent or grandparent, sometimes draining their savings. Or one dysfunctional sibling with take financial advantage of a parent, while other siblings in the family struggle with making ends meet. In our family, both my sisters have children, so my dad feels a soft spot for helping them out. I am single, no children, and I am treated differently. I do struggle to make ends meet. My dad is sometimes even reluctant to reimburse me $20 for gas that I spend driving him around and doing shopping and errands.

I’m trying to remain on good terms with my sisters but it is getting tough. Is there any financial advice or references you can give in my situation?

Answer: You’re right that most financial abuse of the elderly is committed by people close to the person, typically family, friends or caregivers. The toll isn’t small, either. A survey by Allianz Life Insurance Company found that the average victim lost $30,000 and 1 in 10 lost more than $100,000.

Family members may not see what they’re doing as abuse. They may think that they “deserve” the money or that it’s some kind of advance on a future inheritance. They also know that Dad just can’t say no and will continue to press him for money as long as they’re allowed to do so.

You and your dad should consult an elder law attorney to discuss ways your dad can be protected against predators. You can get referrals from the National Assn. of Elder Law Attorneys at naela.org, and the attorney can discuss your options.

One obvious solution would be for Dad to hand over his checkbook to you, which would give you the unpleasant job of standing up to your brothers-in-law. You’re certainly in a better position to do so than your elderly father, but he may not be willing to give up control or you may not want the job.

Another option is hiring third parties. Daily money managers provide personal finance and bookkeeping services to elderly clients. They can keep a watchful eye on transactions and spot signs of fraud. You can get referrals from the the American Assn. of Daily Money Managers at aadmm.com. Hiring a geriatric care manager also could be a good move. The manager could assess your father’s health, living and financial situations and help craft a plan to help him move forward. Referrals are available from the Aging Life Care Assn. at aginglifecare.org.

Are you afraid to look at your finances?

Credit counselor Linda Humburg understands why many of her debt-burdened clients don’t want to open their mail. What bothers her, though, is the sheer volume of untouched bills and collection notices that some bring to their first counseling appointments.

“The shoeboxes (full of bills) don’t make my heart drop as much as the grocery bags and garbage bags,” says Humburg, counselor manager for FamilyMeans Financial Solutions in Stillwater, Minnesota.

Not wanting to confront unpaid bills is a perfectly understandable, if unfortunate, reaction to a bad financial situation. And it’s not just people in extreme debt who might be afraid to look. Many people avoid checking their credit scores or using retirement calculators because they’re afraid of what they might find.

The problem is that delaying action usually makes matters worse.

In my latest for the Associated Press, the high cost of living in denial.

How to ruin your finances fast

Some financial disasters are a long time in the making. It typically takes years of unfortunate choices — minimum credit card payments, forgone savings opportunities — to create suffocating debt or a poverty-level retirement.

Other disasters you can trigger almost instantly. The decision itself costs money, or the clock starts ticking toward a consequence you might not have foreseen. In my latest for the Associated Press, three common ways to trash your finances fast, plus how you may be able to undo or limit the damage.