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Focus on your personal finances when politicians and the Fed let us down

Evan Guido
| Specially for the Herald-Tribune

My heart breaks for all Sarasotans who were or are still affected by Hurricane Debby. If you are one of them, you are in my prayers. Our beautiful county will recover better and stronger than ever, and rightly so. We are a strong community. We take care of our neighbors when Mother Nature goes crazy.

It doesn't help that inflation is eating away at our purchasing power when we Sarasotans need all the purchasing power we can get right now. It's disheartening to find that your savings aren't what they used to be, and since we're in the middle of election season, politicians are so eager to shift the blame for rising prices onto their opponents and avoid any responsibility for their contribution to the predicament we find ourselves in.

The truth is that we don't have enough fingers to point at the people who allowed or caused the price increase. In hindsight, it's easy to think that the executive branch, Congress, and the Fed overdid pandemic relief and opened the money floodgates with a zero-interest rate policy. Lower taxes are certainly a great thing, but they also freed up spending by consumers and businesses, leading to more hiring, higher wages, and, yes, more spending.

It's not just politicians and technocrats at the Federal Reserve who are driving inflation. We've done our part by accepting almost any price we've been offered. Of course, we moan and groan about the price we're paying for it, but for one reason or another, we keep buying.

So what will slow the price increase? The government has many tools at its disposal. The Fed can raise interest rates, which makes expensive items more expensive. This reduces demand and the need to hire more workers. Eventually, the economy slows down and hopefully inflation. The government can also raise taxes, cut spending and hopefully reduce the deficit. We can be consumers who are more financially sophisticated.

The tools are there, but the will to use them is weak. Politicians don't like to talk about cutting programs and services preferred by voters in an election year. They would rather be remembered for what they have done, not what they have taken away. The Fed is – in theory – independent of political pressure, but it must balance the often paradoxical goals of full employment, low inflation and responding to financial crises. That would be difficult for anyone.

While we can't rely on the government to curb inflation (at least until the election is behind us), we can control how inflation affects us. Not completely, but we do have some choice.

Some purchases are necessary or very difficult to avoid, and there is not much we can do about them. But if there is an opportunity to save, we should take it. We may not be able to control the country's economy on our own, but we can always work on our personal savings. Let's focus on keeping our own inflation rates under control.

Evan R. Guido is the founder of Aksala Wealth Advisors LLC, a member of the 2018 Forbes Next-Gen Advisors List, and a financial expert at Avantax Investment ServicesSM. Evan leads a team of retirement transition strategists for clients who consider themselves the “millionaire next door.” He can be reached at 941-500-5122 or [email protected]. For more of his insights, visit heraldtribune.com/business. Securities are offered through Avantax Investment ServicesSM, member FINRA, SIPC. Investment advisory services are offered through Avantax Advisory ServicesSM, insurance services are offered through an Avantax-affiliated insurance agency. 6260 Lake Osprey Drive, Lakewood Ranch, FL 34240.

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