Life: Hedge against inflation in everyday life

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Unless you have been hiding in the middle of the forest and living off the land, you’ll probably have noticed that inflation has not been kind in the past “almost a year”.

Annual inflation rate in the US, as measured by CPI.

And inflation is happening in the worst time ever, as COVID-19 is out here like, “hey, you can go places now.” Meanwhile gas prices are like, “the fuck you can.”

Inflation was already a central economic issue in 2021, yet here we are in 2022 and overall inflation is at 7.5%+ (gas prices being closer to 40%). However, prior to 2021, inflation has been kind to us for the last decade.

What’s causing inflation? If you Google that, you’ll find a myriad of differing responses. If I were to take a stab at it, I’d say it’s a combination of our purchasing and employment patterns due to the pandemic, decisions made by the Fed and President Biden, and corporate decisions making a challenge for supply to adjust to surging demands.

What Causes Inflation and Who Profits From It?
Possible reasons for inflation. Source: Investopedia

When will inflation normalize? If you Google that, you’ll also find yourself in a position of bewilderment. We don’t know. Will it be when typical spending patterns normalize? Will it be when COVID-19 has taken a chill pill? Will it be when more people return back to the workforce? I have no idea.

While inflation is truly harshing my mellow and choking me at the gas pump, it’s not causing as much damage as climate change. It’s still a cause for concern, but I have four helpful tips on how you can offset the impact inflation has on your wallet.

How to Negotiate Any Bill, According to 3 People Who Did It | NextAdvisor  with TIME

Tip 1: Negotiate your bills

While I realize negotiation is out of many people’s wheelhouse, it’s a skill worth embracing and taking action. Auto insurance, home insurance, disability insurance, fire insurance (if you live in California) are all bills you should consider negotiating. Cable, internet, phone bills as well. Many people also qualify for discounts on utility bills. You won’t know until you ask.

Make a window of 15 minutes in your day today to make 1-2 phone calls and negotiate a couple of monthly bills you have. Show up with a little bit of leverage, and ask for what you want. The worst thing they can say is “no”, right?

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Tip 2: Less subscriptions

Download your most recent bank statement and print it out. Highlight your monthly subscriptions and cancel the one’s you’re not using. If you’re using all of them, maybe consider which one is not providing you the most value and eliminate it.

Then go through and highlight any charges that don’t bring you joy. By visually seeing your bank statement, you’ll easily be able to identify excess spending which can make a difference during this time of inflation.

How to Ask Your Boss for a Pay Raise | Workful

Tip 3: Time for asking for a raise

Ask for a raise. Easier said than done, yeah?

Not everyone can waltz into their bosses office and comfortably say, “hey, I want a raise.” Be mindful of how long you’ve been with the company, how much value you’re adding, etc. You’ll need to prove you’re an investment worth making.

You’ll need ammo. Have you been taking on additional responsibilities? Have you taken the lead on projects? Have you worked overtime when the company has needed you most?

Additionally, you would need to figure out how much of a raise to ask for. Yes, I’m sure you want at least 7.5% to keep up with overall inflation, but you would need to do some homework based on your position and geographic location for the minimum you can ask for.

General Investment Types | StreetFins®

Tip 4: Invest

The best way to hedging against inflation is to make your money grow. While I’m an advocate for a healthy emergency fund, hoarding excess cash right now in a saving account will cost you. Right now, cash is trash. And at this rate, if you were to keep your money in cash and not invest it, within a decade you would lose approximately 50% of your cash’s value.

So how to invest? Let me throw out a few words you may have heard of: 401(k), IRA, brokerage account. Contribute 5%+ of your monthly paycheck to your 401(k) plan if you have one. Next in line is IRA, invest here if you have extra.

What kind of investment to make? I always recommend index funds to new investors. Those funds have the lowest costs. Index funds are consisted of many individual stocks. The logic behind this is that if the cost of doing business goes up due to inflation, then revenue will also go up. If revenue goes up, then so does your money in the funds. Of course there are other variables that play into the price of the stock market, but inflation is one of them.

I know you may have wanted a more sophisticated answer to hedging against inflation, but it really is this simple, cut the unnecessary cost of living, and grow your asset.