As in every situation in life, if you want to survive inflation, you need to remain one step ahead of it. Read how to define inflation and survive it.
3-5% inflation is a normal part of every economy and it is naturally taken into account while preparing various micro and macro financial forecasts. In order to survive inflation as an individual first of all you need to understand that purchasing power of your money decreases with every passing year. If you spend N amount of money to buy 10 KG of vegetables this year, you’ll be spending N x (1+I/100) to buy 10 KG of vegetables next year if the rate of inflation in your country is I%. So even to maintain your current standard of living you must increase your income by I% every year.
Here are a few things you can do to survive inflation
- Invest in assets, don’t just horde cash. Assets like land and gold increase in value as the time goes buy. If you simply keep hording cash, due to inflation, its buying power will keep diminishing and you may realize that you miscalculated when it’s too late. You can also invest in arts and other collectors’ items.
- Reduce consumption. As you pay more and more on the same things, make a list of things you can live without. If they’re unnecessary expenses, shelve them with immediate effect. Devise ways you can bring down your power and gas bills.
- Adopt a healthy lifestyle. Surprisingly, food that is good for you is a lot cheaper compared to that is not. By adopting a healthy lifestyle you can significantly reduce your medical bills too.
- Increase your income streams. Having multiple income streams is not as difficult as it seems. Do some out of the box thinking, put in some effort (instead of idling your time away on TV or useless websites) and create multiple income streams so that you always have extra cash to spend.
- Eliminate your credit card debts. Credit card debts have an uncanny way of eating into your finances and you don’t even realize it. Give back all the money you owe and stop using credit cards at all if you can.
This is are some small steps you can take to survive inflation. Do share your opinions and ideas in the comments section.