This is the “best defense” against inflation, says the financial adviser

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Inflation is gradually declining but remains high, so fast-rising prices continue to weigh on consumer budgets.

For some, that might mean making difficult financial compromises — an exercise that begins with looking at the situation and making an honest assessment of your needs, said Lazetta Rainey Braxton, board-certified financial planner and co-CEO of a virtual planning firm 2050 Wealth Partners.

“The best protection against inflation is to truly know your needs and accept the fact [prices have] increased,” said Braxton, a member of CNBC’s Financial Advisor Council.

More from Ask an Advisor.

Here are more perspectives from the FA Council on how to navigate this economy while building wealth.

Inflation is a measure of how quickly the prices consumers pay for goods and services are increasing.

When inflation is high — and outpacing wage growth — there are two basic financial adjustments for households to make ends meet: raise income or lower spending, Braxton said.

The consumer price index, a key indicator of inflation, rose 5% for the year to March, the US Bureau of Labor Statistics said on Wednesday. That’s an improvement from the peak of around 9% in June, but is above the policymakers’ target of around 2%.

Average wages have not kept pace. hourly wage down 0.7% over the past year, taking inflation into account – meaning the consumer dollar will be weighed down a little further.

Moody's: Trendlines suggest that inflation will reach 3% by the end of the year

To increase income, the key is “to be creative,” Braxton said. For example, homeowners with an extra room might consider renting it out. People can use their professional skills like graphic design or copywriting to start a side job for extra money and they can use websites like up work to help find freelance opportunities, Braxton said.

Financial advisors have also advised taking advantage of the hot job market to potentially find a better-paying job or ask for a raise. While conditions have cooled off somewhat in recent months — particularly in some industries like tech — it’s still largely a job-seeker market, experts say.

Alternatively, households looking to cut costs should first list all expenses and consider trade-offs, Braxton said. Do you need cables? How often do you use a particular subscription service?

“There is no denying that we are in an era of inflation,” Braxton said. “The bottom line is that everyone feels pressured.” This is the “best defense” against inflation, says the financial adviser

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