Budget: How to beat inflation rate by money expert who was financially free at 34

4 mins read

The Office for Budget Responsibility (OBR) claimed the CPI rate of inflation will average four percent over the next year. This means prices will rise and purchasing power will decline and many Britons will be worse off.

What can Britons do to beat inflation? Ken Okoroafor, a financial expert, achieved financial freedom at age 34.

This included becoming mortgage-free, a process Ken detailed previously to Express.co.uk. 

He now runs the financial platform The Humble Penny to educate others looking to improve their finances.

“There are a number of things people can do,” Ken advised, discussing rising interest rates.

“The first one is that during times of inflation what you really want to do is have your money invested in the very things that are going up in price.

READ MORE: Pensioners ‘lowest paid in Europe!’ – man fears ‘rough year’ as he misses out on 8% rise

He said: “The second thing is to understand what inflation rate you are trying to protect yourself against because you’ve got the RPI, you’ve got the CPI.

“The RPI is much higher than the CPI, which the Bank of England typically tracks.

“My suggestion is that people really focus on the RPI as the one that they want to try and protect against.”

The RPI includes mortgage interest payments, and so is influenced by house prices and mortgage increases, while CPI only takes into account goods and services.

Home-owners Britons ideally want to stay ahead of their mortgage’s interest rate.

Ken also suggested taking the opportunity to boost your skills and speak with your employer about pay.

He said: “Another way of looking practically at beating inflation is people focusing on investing more in themselves, because the more you invest in yourself the more you are able to dictate your prices, you can have better negotiations with your employer, that sort of stuff.

“You’re able to have those negotiations around your pay for example.

“If anyone hasn’t had that conversation already it’s definitely something worth doing, asking for at least an RPI increase in salary.”

Ken spoke about salary sacrifice schemes with Express.co.uk recently and explained how they can boost your pension pot and help you mitigate the National Insurance tax increase. 

National insurance is a tax on your monthly payments. From 6 April 2022 to 5 April 2023 National Insurance contributions will increase by 1.25 percent, a post COVID measure announced by Boris Johnson.

This is an agreement between you and your employer to reduce your earnings by an equal amount made to your pension contributions. Then your employer agrees to pay the total pension contributions.

This will reduce your take-home pay, but the money put away with the salary scheme will therefore not be subject to the higher tax rates introduced by Boris Johnson’s Conservative Government.

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