How to beat inflation guide for ordinary people
Inflation is no respecter of people; it affects all of us, rich, poor, or in between; you do not have to have a lot of money to feel the effects of inflation, in fact, it is those who are least able to afford the rising prices who are affected by inflation.
So what is inflation?
Inflation is the name given to the rises in prices. This is all tallied up and averaged out with the measure of inflation indicated by a percentage point. If inflation is say 1.5% then it means prices on average have risen by 1.5% in the 12 months the survey was taken.
There are many different strategies for beating inflation, most involve investing for a return greater than the inflation rate. If you just stored the money under your mattress, the value of your money would decrease every year by the value of the inflation rate. If the inflation rate was 1.5%, then your money would decrease by 1.5% per annum.
1-CUT UP THE CREDIT CARDS
When you purchase stuff using borrowed money, you are paying inflated prices for everything and this all adds up during your lifetime. “If you have not got the money then don’t buy it,” is a good rule to live by.
2-CUT BACK ON YOUR SPENDING
This is the best way of getting ahead financially in life and will protect you from some of the effects of inflation. Think of everything you spend on an annual basis. Some folks think nothing of spending $20 on coffees per week, but that adds up to $1000 per year.
3-BUY SECOND HAND WHENEVER PRACTICAL
There is a huge difference between the price of something in a high street store and that same item in the second hand/charity shop; the amount you will save will quickly add up during your lifetime.
4-DON’T JUST SAVE YOUR MONEY…
Invest it; there are plenty of options for you to invest your money, even if you do not have a lot to invest. “You do not have to be rich to invest but you need to invest to become rich.”
5-MANAGED FUNDS
This is my favoured method for a long term inflation beating investment. Your retirement fund with all of it’s incentives is a no brainer, but there are lots of other managed funds you can join, many are ideal for the small saver who do not earn all that much. Managed Funds or Index Funds as they are also called have stood the test of time as the best way of beating inflation.
There are a lot more options for investors looking for managed funds to invest in and some of them can be started on a shoestring, it is all about managing your money and how to beat inflation.