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What is Inflation?

What is Inflation?

March 23, 2022

     A few years ago we did not spend much time on the exciting subject of inflation. It was difficult to express the impact inflation will have to a client in their 30s planning for retirement, until this year. Since the start of 2022, wages have remained about the same while food is up 20% and gas prices have nearly doubled. We are experiencing the erosion factor of inflation in full effect.

     If you foolishly blow money on a shopping spree or concert tickets to Taylor Swift, you at least have a ‘brief moment” of satisfaction. For this reason, inflation is the worst of all financial obstacles. Your money is just gone with nothing to show for it.

     Unfortunately, the way governments have spent money the last few years will cause inflation and will be a part of our lives for a while. There is hope. Making a couple changes can help you overcome this challenge.

  1. Don’t sit on cash: The money on the sidelines is costing you money. Last year a client passed away. This was a terribly shock to the family and the first reaction was to take the life insurance and just set it in the bank. The dilemma is that if money is not making money, it's constantly losing buying power.
  2. Be intentional about building wealth. This has nothing to do with income. In the past 20 years I’ve seen many blue-collar workers build wealth to last their lives and the next. I’ve also seen countless high-income earners go bankrupt. There is a multitude of reasons for how and why but please allow me to oversimplify it. 

   Reason A: Save first, spends what’s left.

   Reason B: Spend first, saves what left.

     Regardless of where you are now, choose to intentionally save out of your future increases. The next raise, bonus, marketplace sale, etc. will go to saving and a wealth building account before lifestyle spending increases. Over time, you will find yourself getting better and better.

     Finally, inflation is a part of our lives, and it will continue to impact our finances. “Let it be disappointing and not devastating.”

Build Wealth. Create Legacy.

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