Granite Wealth Management

Sports, Inflation, and Other Things We Can’t Control

Unrelenting and uncontrollable anxiety. Drastic mood changes. Inability to focus. Peaks of bliss and valleys of anger and defeat.

Boston sports fans know what comes with the role of watching their favorite team’s journey through an entire season. Every pitch (Red Sox), every first down (Patriots), every free throw (Celtics), and every faceoff (Bruins) feels like it holds tremendous power over what our individual future might look like. Though that is ridiculous, right? A sports team, one we don’t even play for, but just so happens to be geographically located in the same area as us, holds SO MUCH sway over how our day/week/month might go. What started as entertainment, likely as a kid, somehow morphs into this thing that we let define ourselves, because we identify with the team. The team’s success (or failure) is far more exciting than our day-to-day lives (or so we think), though all of it (literally, all of it) is out of our control.

The economic version of this, at least over the last few years, has been the Federal Open Market Committee (FOMC) meetings. They are held eight times per year, and include 12 members from the Federal Reserve Board and Reserve Banks. In these meetings, the FOMC reviews economic and financial conditions, determines the appropriate stance of monetary policy, and assesses the risks to its long-term goals of price stability and sustainable economic growth. In essence, it applies to everyone’s life to some degree, but none of it is within our control.

Yet we’ve never experienced such viewership of FOMC meetings as we have over the last few years. While those in the finance / economic industry surely have paid attention to some degree, we now have what seems like everyone aware, to some degree, about what came out of each FOMC meeting. Inflation reports, current Fed Fund Rate changes, future projected Fed Fund Rate changes, and labor market indicators – all topics covered by these meetings.

But, just like the Boston Bruins completing the winningest season in NHL history this 2022-2023 season, and losing in the first round of the playoffs, we get largely wound up about things that are far outside of our control.

When it comes to the economic picture and forecast of the US, the most efficient use of your energy to have a greater positive impact on your life’s trajectory might instead look like this:

Know your budget. If you don’t know what your income AND expenses are monthly, start by figuring those out. Your expenses should certainly be less than your income, and your budget should include money to cover your monthly needs, a small percentage for discretionary spending, and a dedicated amount put away for your future (i.e. retirement). Consider eliminating unnecessary monthly expenses, like unused streaming subscriptions.

Eliminate your debt. With interest rates rising still, as they have for over a year, the cost to borrow has only increased. Revolving debt, like credit cards, can be the worst of all types of debt. Start with your highest rate credit card, and work to pay it off as fast as your can. And stop using it for things you don’t already have the cash for.

Mandatory monthly savings. With the cost of everything being much higher compared to just a few years ago, any potential emergencies that might come up also have increased in cost, like a new transmission or set of tires for your car. Set a goal each month to put aside into savings to build a cash reserve account to insulate you from bumps along the road: start with 5%, and increase that savings goal each month if you can meet it.

Invest. This could be Certificates of Deposit at your bank, an investment account for the stock market, or even real estate (if you have the means). With inflation high and interest rates increasing, the result has the stock market struggling to make headway to positive growth. Use this to your benefit by investing now while prices are lower, particularly if the timeline in which you’ll want to access those invested dollars is 5, 10 or 20+  years.

Instead of lamenting over the news you see everywhere you go about our economy and inflation (all things you cannot control), work to find momentum in your daily life that provides you actual value. Knowing that you cannot control the economy or inflation is helpful in understanding what you can control instead. If you’re not sure where or how to start, find an advisor that can help you get on the right path.