Turn on the television, read a paper or go online and chances are you’ll be bombarded with bad news about the state of the economy. Inflation is being whispered about, and in some cases, shouted about from the rooftops. Are we really facing inflation and how bad will it get? How can you find ways to save money when everything seems like it costs more?
First and foremost, inflation rates are up, but they are not as bad as they have been. For example, inflation in the 1980’s was actually much worse and we were in lousy economic shape back then. Now, due to the higher cost of living, it may seem as though we are in the throes of a world ending inflation, but it’s not quite that bad, at least not yet.
The main economic issue right now is how our daily necessities are quickly rising in cost. For example, flour now costs 37% more, and milk prices have jumped 23%. You don’t need to be told that gas prices are killing a lot of drivers, it’s already pretty obvious. Add in rising energy costs, crop failures and the housing crash and you have a recipe for disaster.
However, you don’t have to fall prey to inflation, if you take the right steps to avoid here. Here are some great ideas that will help you survive inflation, no matter how bad it gets.
First, if you don’t have a savings account, now is the time to start putting money aside. It may be a little tough, but you need to have some security and a cushion to fall back on. Even a small savings account can be useful. Inflation effects everything, but with the right budgeting, you can find at least some money to put aside each month.
Next, you can consider your employment options. If your company will allow you to telecommute, you can make that switch. You’ll save a lot of money on gas, particularly if you have a long commute. You may also want to consider either getting a second job that is close by, or working an online second job that you can handle from home. Getting more income coming in will definitely make inflation easier to ride out.
If you are investing, it may be time to retool your portfolio a little bit. Historically, bonds perform worse than regular stocks during inflationary periods. However, before jumping into the markets, make sure that you know what you are doing and that you have the help of a broker or financial planner to help you manage your portfolio.
Lastly, when it comes to beating high food prices, the old standards still apply. Clip coupons and find cheaper stores. Consider switching to a less expensive brand. No one likes having to scrimp, but if your budget is already tight, this can make a big difference. Stop eating out for one extra night a week or find ways to save money elsewhere to give you a little more freedom with your budget.
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1 comment so far ↓
My follow-up to this: (1) Resist the temptation to invest in gold and (2) get some inflation-protected assets into your portfolio. VIPSX is what I bought and it has done well. There are others.
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