Concerned About Inflation? 5 Steps to Take Control of Your Finances
Key Takeaways
The 2025 Northwestern Mutual Planning & Progress Study finds that Americans are most concerned about the impact inflation could have on their finances this year.
But while you can’t control the economy, you can take steps to manage your own money.
Working with a financial advisor is a great way to take control of your finances by creating a plan that’s designed to focus on your needs.
Americans are feeling more optimistic this year that the country will avoid a recession, according to the 2025 Northwestern Mutual Planning & Progress study. But a majority of adults expect inflation to increase in 2025—and 52 percent of Americans believe their household income is growing more slowly than inflation.
“Economists often talk about how inflation is ‘sticky,’ meaning it takes time to reverse a broad economic cycle,” says John Roberts, chief field officer at Northwestern Mutual. “Our study findings show that inflation is sticky at the individual level, too—it remains top of mind for people, and they get reminded of it often in their daily lives.”
of U.S. adults say inflation is the dominant concern that could have an impact on their finances this year, and they rank inflation as the No. 1 obstacle toward achieving financial security.
of Americans believe their household income is growing slower than inflation.
“Houses, kids, groceries and gas: all of these higher prices are having an outsized impact on people’s budgets, and most Americans believe these challenges will grow in 2025,” Roberts says. “If Americans can adapt by financially planning and acting intentionally now, they can enjoy today without sacrificing tomorrow’s goals.”
A bright spot in the study shows that more Americans are taking positive action to improve their financial discipline, which reverses course on a steep decline in discipline since 2020. So while you can’t control the rate of inflation, you are in charge of how you adapt to it. If you’re ready to get a better handle on your financial future, here are some steps you can take to get started.
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5 Steps to Take Control of Your Finances
1. Track and prioritize your spending
Creating a personal budget can seem like a daunting and unpleasant task—a chore that may highlight a need to spend less. Depending on your situation, you certainly may need to reduce your spending. But look at it this way: You’re prioritizing the spending that’s most important to you and letting things that are less important fall off. You’re just saying no to some things so that you can say yes to others. You might even want to try loud budgeting—a popular trend more people are employing to curb their social spending.
Your main goal is to have more money coming in each month than going out. But make sure that you’re thoughtful about it so that you feel good about what you’re getting for those dollars you spend.
2. Prepare for life’s ups and downs
Now that you have a plan to get your spending to a good place, let’s focus on a critical component of every financial plan: being ready for life’s twists and turns. Your basement might flood, your car could break down or, even worse, you might face an unexpected health scare. You can’t fully prepare for everything, but having strong protections in place to get you through tough times can make all the difference if disaster strikes. Plus, knowing you’ve made a plan to handle unforeseen problems can help you feel more confident about your money. Consider these strategies:
Build an emergency fund: Get started by setting up an account that gives you easy access to three-to-six months’ worth of your expenses. Don’t worry if you don’t have it all in savings yet. What’s most important is to have access to this money. If you own a home, having a HELOC in place can help. Even if you rarely need to tap into it, knowing that it’s available if needed, can put your mind at ease. Take some time to figure out how much you should save, then start building your fund up slowly.
Insure your income: If an income earner gets sick or hurt and can’t work or if they pass away prematurely, your financial situation can change overnight. Make a plan for how you’ll cover your income in the event you’re unable to work.
Make sure your family is covered: There are solutions you can put in place to make sure your family is able to continue living the life they do now if you’re not around. Even if you’re not the primary earner, life insurance can help your family continue to work toward their collective financial goals in your absence.
Feel better about taking action on your dreams.
Your advisor will get to know what’s important to you now and years from now. They can help you personalize a comprehensive plan that gives you the confidence that you’re taking the right steps.
Find your advisor3. Save up money for future goals
Retirement is a big one, but there are lots of goals to save for: education, a new house, a wedding someday. Automate withdrawals so that you never miss this money. You’ll eventually grow the amount you need.
4. Create—or adjust—your financial plan
Doing all of the things above is important, but a financial plan built with your financial advisor can help you bring it all together. Your advisor will take the time to get to know you—and what’s important to you—so he or she can help you fine-tune how you’re allocating your money. Your conversation may also reveal where you have some financial blind spots and highlight opportunities for growth.
“For Americans of all ages, the best answer for financial worries starts with a conversation about planning and action,” Roberts says. “A comprehensive financial plan can be the key—helping people open doors to homeownership, retirement and other priorities in life.”
Having confidence that you have the correct amounts dedicated to the right things lets you know you’re on track with your money now and in the future—even if life doesn’t always go as you planned.
5. Strive to find a healthy balance
There are plenty of unknowns to worry about, from policy changes and social conflict to interest rates and market volatility. Working with your Northwestern Mutual financial advisor can help you put outside stressors in perspective and allow you to stay focused on what you can control.
“Spending money and enjoying life can feel great if it’s part of a financial plan,” Roberts says. “But spending money without planning for risks or for the future can create even more anxiety in people’s lives. This is where a trusted financial advisor can add a lot of value. Advisors help clients identify their blind spots and opportunities and instill them with confidence—knowing they are making good decisions for today and tomorrow.”
