Is Inflation Ruining Your Life?

The mystique around inflation is that it is an ever looming threat just around the corner. In fact, if we don’t watch out, we could end up with the hyperinflation that devastated the Weimar Republic of Germany in the early 1920s. If you remember, this created a level of public misery comparable to the impact the Great Depression had in the US in the 1930s. There are stories of people in the Weimar Republic who had to use a wheelbarrow full of money to buy a loaf of bread.

Fortunately, in 2017, the US government has a far better understanding of how to measure inflation, which makes this alarmist scenario highly unlikely to ever happen again. In theory, then, inflation isn’t much of a personal threat because everything can be figured out and adjustments made. Unfortunately, in practice, things may not work out that way, and you might find yourself paying out more to cover your basic needs then the money you’re bringing in. In fact, you may be only a paycheck away from losing everything. In an emergency situation, say, your car breaks down; you may have to use a payday loan alternative to stay afloat for the month.

So let’s take a closer look at what inflation is and what you can do to not only survive, but thrive in an inflationary economy.

Reality Check: Demystifying Inflation

Things aren’t as bad as you might believe based on your current circumstances. Just to dispel the myth, here is what inflation is in a nutshell:

Inflation is the rise in price across a wide range of products in an economy. It can be calculated using some simple math that you can do yourself to measure the cost of a certain product this year compared to what it was last year. (Inflation Rate= ((T2xT1) x100), where T1 is the first time period and T2 is the second period). The United States Bureau of Labor Statistics measures the consumer price index (CPI) to measure the average change of consumer goods and services over a specific period of time.

It’s Still Possible to Earn a Good Living

Although it might seem as if the economy is bad and getting worse, this need not be true for you personally. If you’re paying out more than you’re earning then you’re either underearning or overspending. Both problems can be fixed.

  1. How to stop underearning.

If you’re under-earning, it could be because you work for a corporation that just doesn’t pay a fair wage. Unfortunately, many corporations try to get more out of workers than they are willing to pay out for the labor they demand. In some businesses that were downsized after the financial crisis in 2007-2008, a person might be doing the job of two people while still receiving the same salary. If you find yourself in this situation, then an immediate solution is to polish up your resume and actively search for a better job.

A second reason you may be underearning is that you’re under skilled. You can figure out if you’re under skilled if other people in your organization appear to be making a good living.

Finally, a third reason you could be under-earning is that you’re under performing at a job. As a result, management sees no reason to reward you better for the work that you do.

So, if you want to stop underearning, you have to find the cause and then take appropriate action. If you’re working for a corporation that exploits you, then find one that treats its people well. If you’re earning less than others in your organization, find out what skills the organization is rewarding and get skilled up. And if you’re not engaged by your job, then you should find work that excites you, which may include starting your own entrepreneurial venture.

  1. How to stop overspending.

It’s possible that you’re actually earning a decent income in relationship to the average cost of goods and services but you’re overspending; in common parlance, you’re living above your means. You’ve become a victim of lifestyle inflation. The solution is to create a budget and stick with it. Find out where the money is leaking out and plug those leaks with some fiscal discipline.

In conclusion, yes, inflation is real, but it’s not alarmingly high enough for you to blame all your woes on the economy. If you find yourself in a pinch, then you need to either find a way to stop underearning or to stop overspending.