You’ve surely heard the warning before. Inflation, it seems, is upon us. Our dollar is worth less and less and the price of our daily necessities continues to increase at alarming rates. Here are just a few of the ways that Crisis Times says inflation, whether it be monetary or price inflation, affects us negatively:
- Fixed income recipients feel the pinch because as prices go up, income doesn’t also go up.
- Since people tend to spend more cash during times of high inflation, national savings decreases.
- Many companies go out of business because of the losses incurred because of inflation.
Unfortunately, the evidence to support the certainty of inflation is all around us. It should come as no surprise to anyone that gas prices are on the rise and seem to show no sign of relenting. Just last week, we saw gas prices rise a whopping 17 cents a gallon, and with continuing disquiet in the Middle East, the cost of oil is just going to climb higher and higher.
As far as grocery prices are concerned, Boston.com warns that “Americans should brace for higher food prices this year now that demand for corn has pushed US supplies to their lowest point in 15 years.” Yahoo! Finance adds that “the USDA expects food inflation to “accelerate” in 2011, especially for meat, cereal and dairy products.” In terms of clothing shopping, “cotton is now 80% more expensive than it was at the start of 2010, and manufacturers are passing those added costs on to customers”
If these facts seem a bit scary, take a look at this startling information:
The costs of heart disease in the United States will triple between now and 2030, to more than $800 billion a year, according to this week’s report from the American Heart Association.
Ok, enough with the scary statistics. I don’t mean to be a Debbie Downer, but this post is about overcoming and saving money even in the face of inflation, so we have to know what we’re up against. Now that we know what it is we’re fighting, we can arm ourselves for the future. Here are just some of the ways that you can put on your game face and fight against inflation:
- Invest in Goods or Commodities, Not Money:
According to eHow, you should:
“Invest in commodities such as gold, oil, and metals. Historically, the prices of commodities rise greatly during an inflation and you stand to benefit from that trend if you purchase commodity stock at a low price and sell it during the height of inflation when its price is much higher.”
- Get a Strong Support Group:
Foster your relationships with your neighbors and friends who live close by now. If you can set up groups for trading services (like babysitting or meal exchanges) or goods (like lawn mowers, tools, etc.), you’ll all be in better shape when rising prices really start to startle us.
- Grow Your Own Food:
Start your own garden as soon as you possibly can to grow your own fruits and veggies. Even if you don’t have a yard or the space to grow a ton of produce, you can grow things like herbs like basil on a windowsill inside. Every little bit helps!
- Save Electricity and Energy:
Before the cost of your utilities skyrockets, look into ways to save on your bills. Make a one-time investment into the Kill-a-Watt to find the energy-suckers in your home and/or try a device like the Belkin Conserve Surge Protector.
- Buy in Bulk:
Though frugalistas everywhere go back and forth about the pros and cons of buying in bulk, now may be a great time to stock up on non-perishables when you find good sales. If you find groceries, cotton clothing and home goods that you know you’ll use eventually, now is the time to take advantage of low prices while you can.
Financial Highway suggests stocking up on the following foods, as their prices are projected to rise significantly:
- Corn
- Other canned vegetables
- Kidney beans
- All-Purpose Flour
- Dehydrated fruit
- Canned Fruit
Also, since March is National Frozen Food Month, you should be able to find great deals on frozen foods. Take advantage while you can and stock up!
- Trade in Your SUV:
As much as you may love your SUV, owning a smaller car can save you anywhere from $200 to $1,500 a year in gas alone. With gas prices skyrocketing, trading in your SUV might be a good move to make right about now.
- Ask for a Raise:
Now is the time to try and increase your income so that you can at least try to keep your earnings consistent with the current value of your money. If you don’t foresee a pay raise in your immediate future, try taking advantage of other job benefits.
- Earn Extra Cash on the Side:
Find another source of income, whether you attempt to start your own business, make money from a hobby, or find other ways to pick up a little extra cash.
- Consider Investing in TIPs:
According to Billeater.com:
One easy way to stay in the game is to buy treasury inflation protected securities (TIPS). These are special government-issued bonds that adjust periodically to account for inflation. There is always some possibility of a default, since no investment is 100% secure. Still, most would agree that TIPS are a safe way to keep your money from losing value over time.
- Continue to Save Your Money:
When the interest on money saved is actually lower than the inflation rate, it may seem stupid to save. However, saving your money is still important. Put money away in high-interest savings accounts or mutual funds. Reader’s Digest recommends putting your money in one or more of the following to keep it safe:
- FDIC-insured bank savings, CD, and money market accounts
- FDIC-insured credit unions
- Series I bonds
- Money market funds that invest in Treasury bills
- Saving Money on Gas:
You may have heard the tips before, but with gas prices soaring more and more by the day, saving money on gas is one of the many areas you should focus on. Here are some ways you can hope to save on/conserve gas:
- Don’t drive too fast or too slow. It takes 20% to 30% more gas to drive at 70 mph than 50 mph. Also, accelerate slowly after stops.
- If work is close enough, consider bicycling to work in agreeable weather.
- Consider public transportation if you live in a city.
- Find a group of people to carpool with to work.
- Use the internet as a resource for finding the cheapest gas price in town. Head over to GasPriceWatch.com to track gas prices. You can also visit GasBuddy.com for a network of 174 local sites complete with maps and message boards that tally gas prices by ZIP code.
- Keep your car properly maintained and tuned. A poorly tuned car can use more that 25% more gas.
- Don’t warm your car up by letting it idle. The engine warms up faster when driving anyway, and idling wastes about a quart of gas every 15 minutes.
- Save fuel by combining errands into one trip. Wasteful driving habits can double your fuel consumption.
- Don’t top off at the gas station. According to the Environmental Protection Agency, “you might be paying for gas that goes back into the station’s tanks after your gas tank is full.”
- Be a Tip Hero:
Of course, continue to share and receive money-saving tips on Tip Hero as we fight the battle against inflation right along with you!
What are some of your best tips for fighting against inflation? We’d love to hear your insights! Thanks for being a Tip Hero!
Additional Sources: Guardian.co.uk , SavvySugar , CNNMoney , BeingFrugal.net , and USA Today
Photo credit: tanjila