Fight Back Against Inflation
How to thrive as prices rise
Increasing rents and mortgage payments are making each month harder than the last. Your grocery bill is up. Your paycheck barely changes. When it does, it feels like it’s chasing a goal post that keeps moving further away.
Inflation is rising faster than any mainstream experts predicted. Officially, it’s around 5% in Canada and 7% in the US. Those of us who buy things like food and shelter know that reality is worse than official numbers claim.
Years of government money printing and low interest rates have pumped too much money into the system. That money is inflating prices.
Ok – so what can you do? You’re not some multimillionaire who wants to better invest your eight figure nest egg. You can’t start buying up farmland like Bill Gates. You’re a normal person with an average income, trying to make it through the month. How can you navigate a global inflationary crisis?
There’s a lot that regular non-wealthy people like us can do. Here are six ways you can get ready for the upcoming inflation storm on an ordinary income.
Build a stockpile
The best way you can start is to gather supplies – a great strategy to save money in both good times and bad.
Make a list of non-perishable items that you and your family use on a regular basis. Think of things with a long shelf life like pasta, rice, toothpaste, and medicine cabinet basics. Spices and oil, cereal, flour and canned goods are great options too.
The key is to buy them on sale and to buy a lot. For example, pasta sauce has a long shelf life and I would typically go through one to two jars a week. If I can find my favorite tomato sauce on sale, then I’m buying as many as I can carry home. One jar a week is 52 jars a year, so why not buy it on sale and save the money on your grocery bill in the future?
You might not have a large home to store things in, so try and get creative. Could you put supplies in clear plastic bins to pile up or stock under your bed? It’s convenient to have items when you need them, instead of rushing out to the store and buying when they aren’t on sale. Prices will only go up from here, so why not get ahead?
Adapt your income stream
You work hard every day and put your best efforts into your job. You get results. You might even get a raise – but then you notice that the larger paycheck doesn’t buy that much anymore.
It's not your fault. From the cashier to the nurse, from the manager to the truck driver, inflation is going up fast and people can’t keep up. You can’t win this game. The solution?
Don’t play. Take yourself out. I don’t mean stop working and go on welfare. I mean you need to take charge of your own income stream, either through self employment or some type of side gig.
Could you do what you do, or something similar, on a freelance basis? Freelancers can adjust their rates to whatever happy clients are willing to pay.
Perhaps you have an idea for a small side business or a hobby that you could monetize. Do you have an interest or talent that could start you on the path to controlling your income?
Do it. Those working traditional, 9-5 jobs will not fare well in times of rising inflation. Wages are sticky, and you don’t need me to tell you that companies are hesitant to increase salaries. Start now on the path to setting your own destiny, as small as your first step may be.
Consider your location
Tired of the hustle and bustle of city life? Or maybe you love living in the city, but can’t get ahead financially. It isn’t easy to pay thousands of dollars in rent and still have much left over at the end of the month.
Those who live in more rural locations might do better in times of rising inflation.
The cost of housing is usually lower in rural areas. There may be more land available to start a small garden. Perhaps you would be able to reduce your heating bills with a wood stove or fireplace. Maybe the cool country air lowers your air conditioning costs.
Satellite internet is becoming available across the globe. Those who can reduce their cost of living and work remotely will have the advantage.
Pay down debt
You don’t want to be caught in a rough economy with debt. Interest rates can and have risen quickly.
Track your spending each month. Write down what comes in and what goes out. Then, look at what you owe and try to pay it down, starting with the highest interest rate loans first. This is likely to be your credit card or line of credit, followed by student loans. Other debt like a car or mortgage payment may have a lower interest rate. A little at a time goes a long way if you’re consistent.
You want to owe as little as possible when the global economy is in peril. This will free up your resources for use elsewhere.
Invest
Try to invest any extra money you have, even if it’s only a little bit each month. The goal is to have as much money as possible to generate future income. But invest in what?
It doesn’t have to be complicated. You could open an account with a robo advisor such as Wealthsimple or Wealthbar. These accounts automatically set up an investment portfolio based on your risk profile. All you need to do is deposit money and they take care of the rest.
Watch investing videos on Youtube. Learn about Exchange Traded Funds – ETFs – which are stocks that contain a basket of stocks. These are a great way to buy a variety of company shares in one easy place.
Some people think gold will take over as money printing destroys the dollar. Others prefer bitcoin. No one has a crystal ball, but putting money away in a variety of investments is your best chance for a secure future.
Learn what you can from books and the internet. Try to set aside a steady amount each month. Over time, your salary may buy less and less, but you will be on the path to financial independence through wise investing.
Spend time with people
When times get tough, having a network of people you can trust and rely on will be key. Social connections are a major component of happiness and even longevity.
Get to know your neighbors. You never know when they’ll have something you can trade, or when they could help in an emergency. And make sure you’re there for them, too.
Reach out to friends and family and spend as much time with them as you can. In tough times, those who care about each other and work together are more likely to pull through.
You don’t need to inherit money or have a high income. Start today with these steps and you will be better positioned for the world ahead.