How to beat inflation, today!

How to beat inflation, today!

Share

If you’re sitting around reading news articles, you’re probably not feeling very good about the financial outlook of the country, your investments, or any other aspect of life related to money. Well, don’t fear, the Wealthy Idiots are here!

Inflation and the impact

According to Investopedia, inflation is the decline of purchasing power of a given currency over time. In simplistic terms, you can purchase less goods with a specified amount of money than you could have previously.

EXAMPLE: you used to be able to buy a gallon of gas for $1.50. Today, gas averages around $5 per gallon nation-wide. You can buy less gallons of gas for the same money than you could previously. This single example shows how inflation is burning holes in your money.

According to the Bureau of Labor Statistics, the agency tasked with tracking inflation, the rate increased to 8.6% for the period ending in May 2022. This is the largest increase in any 12-month period since the 1980s. According to CBS News, Social Security recipients are now expected to see a COLA of 8% or greater in January of 2023.

Government reactions to inflation

Naturally, governments will attempt to stop, or at least slow, inflation as soon as it becomes a problem. You may be wondering why the government doesn’t take steps before the problem starts, and that’s a great question. Unfortunately, this is a mystery and there is no good answer.

Currently, the Federal Reserve has been increasing interest rates in an attempt to limit purchasing power and slow the pace of inflation. Although, an argument could be made that they haven’t raised rates enough, but nonetheless, here we are.

How to beat inflation

Reading this article, you probably think you’re up a creek without a paddle. But, you’re not. There are a few things you can do to weather the storm.

  1. Find a way to increase your income. The job market is still decent, so there’s a chance you can increase your income by more than the inflation rate. This step alone could solve your problem.
  2. Cut “wants” so you can continue to pay for “needs”. No one wants to hear this, but it needs to be said. If you can’t afford groceries but are continuing to pay for a $100 per month box service, your priorities are jacked.
  3. Re-negotiate prices for things like internet, cell phones, etc. When is the last time you called your cell phone provider to see if you can get a better price? Give it a shot, today!
  4. Continue investing. By doing this, you’ll come out better on the other side. After all, when we break through this, the stock market will certainly rally.
  5. Try to avoid the super-high-inflation items, like cars. If you can avoid buying a car right now, that’s ideal. Car markets have inflated like crazy and it’s best to delay the purchase, if possible.
  6. Don’t take on new debt. If you continue to increase your debt load during periods of high inflation, you’ll be paying interest on that higher-priced product for years. Don’t do it.

Did I tell you to stop buying name brand coffee? No. Did I suggest that you only eat ramen noodles? No. Should you set your air conditioning at 82 degrees at night to save $20 per month? ABSOLUTELY NOT. Live your life, and enjoy it, but just pay a little extra attention to the ‘I’ word.

Author

  • D.C. joined the Marine Corps right out of high school. When he left active duty after 5 years of service, he quickly earned a bachelors degree and an MBA. He got his first private sector job at a modest salary and quickly worked his way up through promotions. Once he started making decent money ($38k at the time), he quickly realized he needed to learn how to save for his future. After nearly ten years of research and application, he wants to share his knowledge and financial best practices so more people can become Wealthy Idiots!