How Does Inflation Affect You?
Inflation is a financial concept that affects you, and the world around you, no matter what you do. We all need to adjust our financial plans accordingly!
Familiarize yourself with these two aspects of inflation to empower your decision-making:
- The Ins-and-Outs: “Inflation” refers to the price increase of goods and services over time. In fact, since 1913, US prices have risen roughly 3% annually, from the price of milk to the price of a car. Another way to interpret this? You will have to pay more for your usual goods and services from one year to the next. Inflation can also thus be considered a decrease in your purchasing power.
- How We Feel It: While some employers adjust income for inflation, if your paycheck remains the same while prices rise around you, after several years, you may struggle to maintain your standard of living, or fall into debt. If you see higher costs in your budget, and worry about derailing your financial stability, consider adding a second career into the mix.
Inflation does not occur at a set or predictable rate, which can make financial planning tricky. Take, for example, goal setting for your retirement savings. While inflation is inevitable, you can compensate by increasing your savings whenever possible, in order to guarantee that you beat market elements and meet your financial goals on your terms.
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