How To Fight Inflation
One of the most pernicious issues taking place today is inflation. It is a phenomenon that is present within the United States but is also present in the rest of the world.
But what is inflation and why does it matter to us in our day to day lives? This is what I want to dive into today.
First, I will tell you why I’m interested in it and then we will go on to see why we all have to protect ourselves against this huge problem.
Inflation Has A Massive Impact On Your Life
You would would hate it if you realized that someone was stealing your money bit by bit each year.
Yes, it would drive you insane. The fact is that you work hard for your money. But why do you do so?
It is because you want to be a responsible individual who pays for their bills, that saves up, and creates a better life for themselves. There are are things in life that keep you going. These aspects can include, taking care of your family, sending funds back to relatives in another country, having enough funds to cover your respective expenses, and to invest in a better present.
The shores of Ibiza, expensive restaurants like Alinea, fast cars, or even trips to space might call out to you. All of these compelling experiences or things require, one thing, money.
That is why you work hard to earn above the cost of living in your area and save money. It is frustrating when you seek to plan for fantastic experiences and things but find that you are stuck. At first, you may ignore it and continue to press forward. Then the feeling comes back at you, it continues to nag or stay with you.
As someone who likes to get the bottom of things, you start to conduct some research to find out why you feel stuck despite your best efforts. When it comes to your personal finances, where do you start? Of course, you must start with your income and expenses.
The income is very apparent, you see the amount that hits your bank account every year. The expenses may be less straightforward for many of us. But let us say that our expenses haven’t varied that much over the past year. We purchase the same level and type of groceries, the same type of fuel, and continue to stay on trend with our use of utilities (water, electricity, natural gas).
Then, say, you are interested in purchasing a house, have you seen
We notice something strange and alarming, while our purchases have largely stayed the same, the cost of those goods and services have gone up, rather drastically. Much to our dismay, our earnings are the same or have gone up by 0.05% to 1%.
Many of us were alarmed by the rise in prices, we still are, as it has an impact on our future outlook and how we spend in the present. This is the problem with inflation, it has a real impact on how we view the world and the actions that we take within the world.
This is why it is critical to be aware of this concept and to make sure that we are taking the right actions to minimize issues caused by inflation.
What is Inflation?
Inflation is the slow or fast deterioration of purchasing power over time. In other words, the higher the rate of inflation, the less your currency will buy.
This means that you will need to obtain more currency to maintain your standard of living. In essence, if you live in the United States, you will need to earn more dollars to keep up with the slightly higher or substantially higher costs of living.
There is persistent inflation as the United States government through the Federal Reserve targets 2% inflation over the long run. The purpose of this target is to keep everything stable. When we say everything, we mean employment and prices.
While several people argue that the inflation rate is higher than what is reported and that instability seems to be increasing instead of decreasing, this is the current policy and one should be aware of it to protect wealth.
How do we make sure to protect what we earn if there will be minimum inflation per year? Further, how can we be prepared for shocks that make prices jump even more. For instance, we all noticed the housing boom that took place over the past two years. Housing prices rose around 20% or more.
We noticed how rent went up at least 17% in many areas within the United States of America. At the present moment, there is no significant expectation for these prices to go down. Indeed, depending on what happens, they may continue to increase gradually over time.
Again, this is why protecting your current wealth and striving to increase your wealth is important.
But how do you do that?
How To Fight Inflation
Here are the main things to do to fight inflation or its effects on your life.
- Save Money
- Get Rid of High Interest Debt
- Earn more Money
Saving money requires you to focus on your expenses. A review of your current expenses helps you to understand where your money is going to and whether you are spending money on things that are necessary or not. It is always best to start with what is the most important, these include, shelter, food, clothing,
When you think about something like food that is a necessity, your mind may usually wander to ordering food from outside. For some people, that may not be feasible because of the increased costs of eating out.
You have probably heard about people talking about how they purchased two hot dogs and it cost quite a bit more than it did in the past. The cost of food has gone up so much that many people in places that range from Panama to Syria are fed up and are protesting.
Disclosure: This post may contain affiliate links, meaning we get a commission if you decide to make a purchase through my links, at no cost to you. For more information, see our disclosure here.