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Striking Back Against Inflation

Striking Back Against Inflation

| April 04, 2022

Whether you are a young professional with two young children or a retiree hoping to travel in your RV this year, inflation is a major risk to your lifestyle. Steak and gasoline are more expensive this year than last and the trend is going up.  That means priced in pounds of red meat or a full gas tank, your $100 in the bank has lost purchasing power. But you can fight back to combat rising price by spending intentionally and changing a few habits.

Stick to a List: Both past and current Presidents of the United States uses a teleprompter. And when they don’t, when they speak off the cuff it usually spells disaster. Likewise, when you shop off the cuff online or in person the bright lights and flashing displays bewilder and confuse. Soon your shopping cart is overflowing with items you never knew you needed. Why? Because you don’t need them.

A corollary to this is to remember that sales are fake news. If neon widgets are two for one, you are not “saving” money. Why? Because you don’t need two widgets. You probably don’t need one widget. This is a tough one because mentally we think we are getting one over on retailers. Truth is they’re trying to get rid of neon widgets or they are trying to get you into the store to purchase fully priced items. Stand firm, this one is a tough discipline.

Unsubscribe: We think of money like water. Water flows in a current, money is called currency. We put our money in a bank, rivers have banks. Cash is liquid, water is liquid. Well the analogy continues when you think of your spending like plumbing. If you have leaks in your plumbing, you’re losing water. If you have leaks in your spending, you’re losing purchasing power.

One type of leak are unused or unnecessary subscriptions. For instance, streaming movie and TV subscription choices are legion. Typically, you subscribe to a service because there’s only one or two shows you like. But do you really use it anymore? Sure it’s only $8 to $17 per month. But when you get 8 of those you soon find yourself leaking money every month. Grab your bank or credit card statement and find at least one subscription you can live without.

Elbow Grease: Doing it yourself can help you regain lost purchasing power. For instance, a head of lettuce is 53 cents. A bag of chopped lettuce is $2.60. We are being charged for the convenience. Ask yourself if the juice is worth the squeeze. Perhaps it would be better to ask, should I buy the orange juice or squeeze oranges myself?

In a service economy, much of what we pay for is the convenience to not do it ourselves. Personally, I’ve sold my lawn mower, so I will always pay for that convenience. But as I look at the convenience of coffee from the drive through versus coffee I brew at home, the answer is obvious for me. Take a look at the “finished products” you are purchasing and ask if you could do it yourself. This applies to groceries, eating out and chores you’ve delegated.

Hustle or Side Hustle: Efforts in spending intentionally can compound, but so can applying elbow grease to earning money. Currently we are in job market where employers are looking for more employees. See if your employer can give you more hours.

If you own your own business or work in a variable income arrangement like sales, now is the time to put in those extra hours and go for the brass ring. There’s pent up demand as the economy unlocks from Covid 19 protocols. For the next few weeks, do 3.5 times more than you would usually do and see if you can get more money coming in. If you’re not a business owner, start something like side hustle where you can make money, be it long or short term.

This list is far from comprehensive. In fact, I’d love your feedback on ways to stretch your dollar or increase your income. At first we were told that inflation was transitory and then we were told it was due to geopolitics. The only thing we know for sure is that’s it’s here and the responsible thing would be to plan on it staying until it leaves. If you’d like to discuss how this effects your retirement savings or your retirement income, click here.