How to deal with an increased cost of living on a fixed salary
Disclaimer: I am NOT a Financial Advisor, Planner, or Counselor. Hence, the information presented here is NOT professional advice. It is my own opinion and exists only for educational and informational purposes.
Only a year ago you could go over to the convenience store and pick up two bags of chips for one dollar. Today, you can only get one.
That is because of inflation.
What is inflation?
Inflation is the increase in the cost of goods and services, resulting in a decrease in the purchasing power of money.
In other words, inflation equals rising prices.
To get ahead of it, you must roll with the punches– an analogy from the Boxing sport which means to move in such a way that decreases the impact of incoming punches.
Money loses its value by approximately 2% each year, except for 2021 where there was a 6.8% increase in prices.
As a consumer with a stagnant income, you have two choices when it comes to dealing with rising prices.
You can find ways to either increase your income or start cutting back on spending.
But that’s only to get started.
If you choose to just increase your income, you will find yourself having to do this every year to keep up with inflation.
And even though you will be working harder to bring in more money, it will be as though you are bringing in only enough to meet your living expenses.
Similarly, if you choose to cut back on spending, you will find yourself having to do this every year as prices rise. But you can only cut down on so much spending before the quality of your lifestyle decreases.
That’s why this CANNOT be all that you do.
To keep up with inflation, you must be strategic in making your money work for you.
This means investing your money into profitable ventures such as:
- A high-yield savings account
- Starting a profitable business
- Purchasing stocks
You can start with the first thing, which is to keep your money in a high-yield savings account while you invest time and as much money as possible into climbing the cash-flow quadrant. And it helps to work on growing your income and reducing your spending.
There are many banks that offer a high-interest payout, no minimum balance, and no monthly fees.
What are you waiting for?
Thank you for reading.
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