What is solidly on the minds of many people right now is what they can do to beat inflation. If you’re reading this, I presume you are curious about this as well and it’s good that you are.
Without being an economist and using technical terms, it’s important to have a basic understanding of what inflation really means.
Inflation is the general increase in the price of goods and services which leads to a decline in people’s purchasing power over time. It makes the list as one of the major reasons currencies lose value. When governments print more money to make up for not creating enough revenue from their produce, or their excessive borrowing (as is the case in many nations in Africa and Asia currently), there becomes too much money in circulation which leads to inflation.
Inflation is a not-so-silent budget killer! It causes everything to go up, from your groceries to your utilities, transportation and other daily living expenses. Warren Buffet describes it well when he said a few years ago that the challenge posed by inflation can feel like “running up a down escalator”.
So the challenge is, how do you beat this frustrating phenomenon?
How Do I Beat Inflation?
There are different schools of thought as to the best ways to beat inflation. Though none is foolproof, there are good ways nonetheless that would serve your money game better than if you did nothing. Some you might be surprised at and some you can start doing immediately! Here goes the list.
1. Put a limit to your wants and reduce your expenses
Now is not the time to give room to a lot of money mistakes like impulsive buying and living above your means. You have to rein in emotional spending and have a lot of financial discipline in these times to beat inflation.
To help with this, consider tracking your expenses and using a budget. They will help you understand how you’re currently spending your money and uncover any money bleeders you can address.
2. Do not save tons of money in the bank to beat inflation
Shocked by this? Don’t be. Your money might feel “safe” and you feel good looking at your account balance figures but, even with the best interest rates around, what the banks currently offer is unlikely to beat inflation. Carefully picked savings and investments in stronger currencies like US dollars yield better returns overall. You can also save on high-interest-rate apps.
This doesn’t mean you shouldn’t have some liquidity. For your emergency fund and short-term savings, you can put such monies in a high-yield savings account.
3. Invest in yourself and be the best at what you do
As much as you should invest money in various income-yielding assets, know that the greatest asset of all is YOU.
Investing in your own knowledge and skill set is the best way to maintain and increase your value in the marketplace which would help you beat inflation. Learning should never stop. Utilise all the avenues you can online and offline to develop yourself some more and increase your value so you can command greater earnings over time.
4. Increase your earnings to beat inflation
There are ways you can make some more money right now if you’re smart about it. Besides renegotiating your current remuneration with your employers or working paid overtime, you can make extra money outside of your job.
You can sell things you don’t use or use enough. Renting out your stuff is another option. You can take on side jobs and freelance work that won’t run you into the ground. A start on a good business that has low capital needs is a great option too. Earning more is crucial in these times.
5. Invest in assets that have the power to beat inflation
Investing in assets with returns that outpace the rate of inflation should be on your radar. It’s best when you have a diverse portfolio with a mix of these short and long-term assets; equities like growth stocks, real estate like REITS, low-risk types such as bonds, and alternative investments like gold.
You don’t need to venture into all of them at once, especially as a first-time investor. Take control of your money decisions and do due diligence. Test the waters and see what you like and can tolerate.
In Conclusion
Inflation is one of the biggest economic challenges we face, and if you don’t want to suffer its brunt but rather enjoy a better financial situation, now is the time to be proactive and implement as many measures as possible to beat it. I hope the tips above help you achieve this.
Disclaimer: The contents of this article are not to be taken as financial advice and we will not be held responsible for any financial decisions based on this article.