How to manage through rising rates, inflation and market volatility

Inflation, rising interest rates and market volatility have many Americans on edge.

Consumer prices were up 8.5% in March from a year ago, costing U.S. households an extra $327 per month, according to a Moody’s estimate.

To combat rising inflation, the Federal Reserve has begun increasing interest rates. The central bank already raised rates by 0.25% in March and has indicated it will likely implement a 0.5% hike in May. In the meantime, 30-year fixed mortgage rates have already soared to more than 5%. That’s up from 3.37% on Jan. 5, according to Mortgage News Daily.

It’s all putting pressure on the housing market, where prices are still high and inventory is low, and the stock market, which was clobbered last month and remains volatile.

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“It will be a much more tricky, difficult year when it comes to the economy and people’s finances,” said Mark Zandi, Moody’s Analytics’ chief economist.

With that in mind, here’s how to mange through the tough economic situation many Americans are now facing.

Swings in the stock market may make you want to run for the hills.

However, you should be focused on the long-term. Any changes you make to that plan during times of volatility can set you back for years, said financial advisor Mitch Goldberg, president of ClientFirst Strategy in Melville, New York.

“The best thing you could do is to control your own internals: how you react to stress, lessons you learn along your investing journey, and becoming battle-hardened so you could become a long-term investor,” he said.

“Remember, time in the market is more important than timing the market.”

Any money you will need in the short term should be kept out of stocks, so you aren’t forced to sell at a loss when you want to access it, Goldberg said.

Also, if you are nearing retirement, you may also want to be a bit more cautious, Zandi said.

That’s because he has low expectations for market over the next couple of years.

“Market asset prices have gone skyward because of the very, very low-inflation and low-rate environment we were in,” he said.

“We can’t expect to see the kind of returns we did in the previous world we were in.”

Zandi has been predicting that inflation may moderate after a peak around May. However, inflation expectations are migrating higher.

“There are lots of different ways to measure expectations,” Zandi said. “They are all saying people are beginning to believe that this high inflation is here to stay for a long period.

“If that is the case, it will increasingly come true,” he added.

To manage higher prices, first review your budget.

“You…