HOW TO BEAT INFLATION AND EARN MORE MONEY

What is inflation?

Inflation is an economic term that defines the persistent increase in the general price levels of goods and services in an economy.

However, how to beat inflation and earn more money post will help you increase your savings to invest in good instruments.

Inflation means a consumer pays more for the same product or service over time, and the money the consumer pays increases over time compared to the same goods and services supply quantity.

How does inflation affect the economy?

Due to inflation, we must spend more to buy the same product or services the following year. 

Three litres of vegetable cooking oil was between £2 to £3 in March 2022. The exact quantity of vegetable cooking oil is sold between £5 to £6 in September 2022, depending on your supermarket choice.  

Inflation makes goods and services more expensive, so our liquid financial assets shrink. 

How to combat inflation as an individual

Inflation affects different people differently because of the reduction in the money value. If the value of money reduces, some people will gain or lose, and some will not be affected.  

Moreover, every society has two economic groups: the fixed-income group and the flexible-income group. 

When there is inflation in every economy, the fixed-income group lose and the flexible-income group gain. The reason is that the price movements of different goods, services, financial assets, etc., are not uniform.

Inflation causes a persistent rise in the prices of goods and services, but the rates of increase for individuals differ much. 

The two ways we can measure the redistribution of earned incomes and wealth due to the effects of inflation are as follows: 

1. Based on the change in the actual value of some factors, incomes such as wages, salaries, rent, groceries expenses, and utilities. 
2. They are based on the size of income distribution over time due to inflation. i.e.whether incomes of the rich have increased and that of the middle and poor classes have declined with inflation. 

Best investments during inflation and recession

Inflation shifts the distribution of real income from those whose money incomes are relatively inflexible (stagnant) to those whose earnings are somewhat flexible. 

The middle and poor classes suffer during any inflation period because their wages and salaries are not flexible, but the prices of commodities continue to rise. They become more impoverished with little or no purchasing power quality. 

On the other hand, investors, traders, business owners, real estate owners, and industrialists gain more during inflation because they can adjust their present earnings. 

3 best investments for inflation

There is no perfect formula for investment anywhere, and the only suitable investment procedure is that your investment must make 12% to 15% or above to grow consistently.

And remember that 12% to 15% beats the inflation rate of 10.6%.

Advisedly, investment instruments must vary with age and investment knowledge.

HOW TO BEAT INFLATION AND EARN MORE MONEY

To beat inflation, It is imperative to note that a peculiar psychological feedback loop affects the velocity of money, which is a determining factor for the money supply.

The velocity of money

The velocity of money is how frequently people spend their money.

In inflation, people get rid of money and convert it into assets because saved cash will lose value.

In turn, it increases the velocity of money, which then increases the inflation rate.

Saving is significant for middle-class families and those whose salaries are, and it is the first step in securing the future.

However, more than saving is needed due to inflation since people can only predict the future.

Money loses value during inflation, and for this delicate reason, it is very crucial to save and invest in instruments that can beat inflation after tax.

Therefore, invest in instruments that can beat inflation post-tax (Mutual funds, real estate and in your emergency funds.)

GET ANOTHER INCOME STREAM

People that earn a fixed income can get another job. You can do many things to have flexible extra income. If you have writing, content creation or dancing skills, you can hone and sell them as a service. Find a platform where you can sell it as a service. 

START SAVING

The earlier you start, the better. Saving will help you to invest. Proceeds from investments will increase your total income. 

PROGRESS FROM SAVING TO INVESTMENTS

Many Investment value rise with inflation and, in turn, will prevent inflation from affecting your standard of living. 

PROGRESS FROM SAVING TO INVESTMENTS

Many Investment value rise with inflation and, in turn, will prevent inflation from affecting your standard of living. 

YOU WORK HARD TO EARN

If you work hard to make money, you must learn how to make money work hard for you. Read books on finances and investments. Update yourself with tax laws, and more importantly, invest in yourself. 

Conclusion

Inflation can benefit economic recovery and, in some cases, negatively affect some people. 

I hope this help in understanding inflation and how it affects our welfare depending on who you are and what you do to save and invest in securing the future.  

If you want to share anything about the topic, feel free to share it in the comment box.

Thank you for visiting.