Protect Your Money From Inflation
May 29, 2020
Heyyy Finance Fam!
So, in case you don't know what inflation is, it's the increase in prices coupled with the decrease in buying power.
Inflation can eat up your savings and plans for the future. However, you can take steps to protect yourself and money from inflation.
Consider these tips to protect your finances:
- Understand purchasing power. Purchasing power refers to your ability to buy items such as necessities and luxuries. One of the main issues with inflation is that your purchasing power goes down as inflation goes up.
- For example, your $1 could buy an item yesterday, but today you’ll need $5 to buy the same item.
- I'll put it to you another way... remember back In the 90s you could get 4 personal bags of chips for $1? Well, now that same purchase would cost you $4 before tax
- Unfortunately, interest rates and incomes can’t always keep up with inflation.
2. Consider investing in the stock market. Do you have investments in the stock market? Instead of taking them out after every drop, plan a long-term strategy.
- Long-term investments in stocks may protect you from inflation.
- Commodities tend to increase in value during inflation. For example, precious metals or grains may survive inflation well on the stock market because they’re commodities.
3. Consider real estate investments. Real estate can be a powerful investment tool.
- Real estate can fluctuate in value. If you’re considering an investment, then you may want to be careful.
- Although real estate prices can go up during inflation, you have to consider your ability to handle all of the loans and mortgages. Even if you rent out the properties, how will you handle periods without renters?
- Commercial real estate can be even more complicated than buying a home. If you want to invest in commercial real estate, then you also have to deal with zoning laws and extra fees.
- Land is another possible investment option.
4. Consider investing in your future. You have the power to survive inflation, and you can take steps to deal with it.
- Have you considered investing in your future by going back to school? Additional degrees may help you earn more money and provide a bigger cushion during times of inflation.
- However, going back to school isn’t the only choice. You can also take free classes online or from other organizations. You can build your skillset and discover new hobbies that can increase your income.
5. Try to make your income sources grow. If you can make your sources of income increase, then inflation will have a lower impact on you. (psst. monetize your skills for ANOTHER source of income)
6. Get rid of debt. As inflation rises, the interest rates on your debts can also rise - depending on the product. If you pay off your debts, that's less money working against you and saving your buying power.
7. Consider your Social Security benefits. During periods of inflation, benefits such as Social Security usually can’t keep up with the growing prices. Be prepared for this event. Have some savings that will cover you when prices go up. If social security is depleted by the time you need it which is likely, you'll need other sources to fall on and will also need to be prepared for that
Inflation isn’t always easy to predict or avoid. However, you can take action to make it have a smaller impact on your finances. Follow these strategies and protect yourself, your family, and your finances from inflation.
Disclaimer
This is not financial advice. Please only use for educational purposes only
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