The Fed chairman Powell had a press conference yesterday explaining his plan to balance out the rising inflation rate.
To put things into perspective, inflation normally increase 2-3% each year. However, for the year 2021 the inflation rate was 7% which is the highest it’s been since the 80s. Inflation means it costs more to purchase your same everyday items. If you were paying $100 a month for groceries now it will be closer to $107 for groceries.
The good news is that inflation balances out in the long run. As the cost of consumer goods increase so does the pay to employers. However, in order to increase employee’s, pay it takes companies time to implement. So, the real question is howd do you deal with inflation now?
Here is the Immediate Answer:
The easiest answer is to reduce your spending. In order to do this, you will need to review your budget. How much money comes into the household, after taxes, and how much of that income is put toward expenses. I would put your expenses into two categories: A) Needs and B) Wants.
Your ‘A’ category will have your house payment, insurance, food, gas, car note, etc. Anything that you need to pay in order to survive in today’s world. This will be the first category you look at and you will need to make sure you have enough income to meet the demands of these bills.
In the ‘B’ category you will evaluate how much of the income you have left over and separate that throughout your wants. These can be eating out, going on vacation, shopping, etc. These things are the fun or recreational hobbies you enjoy doing but you don’t need in order to survive.
It is very important you look at your ‘needs’ bills first to make sure your income can cover those and then you will have your play money left over.
Once you have your budget set and are able to pay you’re ‘A’ category bills on time, consistently each month then you can start looking into investing your extra money you have left over from category ‘B’.
Fight Inflation Proactively:
Investing is another way to beat inflation. Since the average inflation rate is 2-3% per year you will need to make sure you are earning at least 3% on your left-over money each year. The best way to earn on your money is to invest it.
There are a lot of ways you can invest your money but the most popular way is the stock market. The form of investing can get complicated if you do not know where to start so if you are curious on how to start then leave a comment below by saying, “Show me how”.
Statistically speaking, the stock market earns 7% interest year after year. The secret to this type of investing though is timing. Since the stock market is volatile, meaning it goes up and down like a roller coaster, you will make more than 7% and you will make less than 7% but you will only do that when you take money out of the stock market.
My dad always told me that I should only invest money that I am prepared to lose. So, from the wise words of Dad, “Only invest money you are prepared to lose”, thanks Dad.
Finally, and the most proactive way to fight inflation would be to increase your income. This can also be done in a multitude of ways. You can ask for a raise at your current job, get a second job or start a side business.
There is a specific way to ask for a raise at work. If you were to follow a certain way I would recommend following Ramit Sethi. You can find his advice for asking for a raise here: https://www.youtube.com/watch?v=wWIRyXvu1fY
Getting a second job is an option as well but you would have to take time away from things you love. If you already work a 9 to 5 job that takes your time during the day so a second job might demand hours at night or on the weekends that take time away from your family or hobbies. This is a good and secure option but the negative is that you have to trade your time for the additional income.
The third and final option to fight inflation is to create your own side hustle. This will also take your time as well but the payoff will be great! Depending on what side hustle you choose you will have devote a lot of time and effort in the beginning but once you get it going it can compound over time. iQuit9to5.com specializes in side hustles and creating an extra stream of income for the average American. We have been able to implement a high profit with low effort income stream that is accessible no matter who you are! If you are interested in learning more about this click here.
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