Age of inflation | How to fight against it?

Inflation is definitely a huge topic nowadays considering that the Fed has been printing lots of money coupled with natural disasters (Taiwan drought) and also the worsening pandemic situation in some parts of the world that helps produce many resources. I came across this article by A Pen Quotes on the warnings of inflation and I would think that definitely in the near future, prices are set to rise. Huge as well was at the annual Berkshire Hathaway shareholder meeting where Warren Buffett mentioned that, "We are seeing substantial inflation." He continues on to say, "We are raising prices. People are raising prices to us, and it's being accepted."

Pandemic in India causing prices to rise

The pandemic in India has been devastating as I watch media coverage on it particularly this coverage by Clarissa Ward from CNN. The amount of lives lost is atrocious and saddening. We all know that most of our items come from India or China as they are the powerhouse of manufacturing. With the pandemic raging through India which is one of the powerhouse of manufacturing, goods will be affected and crops will also be affected to a certain extent although certain parts of India are worse hit than others. Companies will have to raise prices as raw material increase in prices and these will be passed onto consumers.

How you can better prepare yourself for inflation

I came across this article on Yahoo! Finance on how you can cope with inflation and I found it rather informative. I will take the key points and elaborate using my own words.

1. Increase your earning power 

   This is definitely the most effective way to combat inflation but it is a very privileged choice because if you are able to have opportunities to increase your earning power means that you either have access to resources or ability to change jobs and earn more.

   Just like how The Wokesalaryman always advocates, to check the industry that you are in whether it is a sunset industry and pick up new skills to be the supply to the demand so that you are able to command a higher salary. With a higher salary, you can then have more capital to work with. 

   Read more: Becoming wealthy opens up opportunities for you | Why the rich will get richer | Dogecoin Millionaire Example

2. Start investing 

   I think in our current generation, many people are starting to invest at a young age as many interesting platforms and concepts besides the stock market is available for investing. Of course as always, you have to ensure that you are not investing with your short term funds. To get higher returns, individuals have been putting in more money to growth/tech stock and also cryptocurrencies. It is always to good to make sure you are able to stay the course in the long term and also build up good saving habits. Investing can be high or low risk and having a diversified portfolio or something suited to your risk profile is important to ensure that you are not panicking over any sudden drop or losses. 

   Read more: Importance of Building Up an Emergency Fund

3. Reduce your expenses and debts 

   If you are not able to increase your earning power, you will need to instead ensure that your expenses are kept low and debt levels are manageable. For example, going for a more affordable HDB flat than a expensive one or even a condo. Managing your expenses is a huge step in ensuring that your money is not being spent recklessly and at the end of the month, you realised you are left with nothing much. 

   Read more: 5 Tips on How I Save More Money

   In terms of managing your expenses, it is always good to automate your salary segregation to ensure you spend after saving and putting a portion of your salary aside. Debt is all right o have but ensure that you do not take on too huge a debt that prevents you from saving and investing sufficiently in the long run.

Of course, the spike in prices might just be temporary but it is always good to be well-prepared. Working on your financial status can be a great first step to knowing whether inflation will eat up the value of your money and how you can ensure that the growth of it beats inflation.

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References: 
https://finance.yahoo.com/news/warren-buffett-just-sounded-alarm-201500714.html
https://techcrunch.com/2020/10/06/india-approves-apple-partners-and-samsung-for-143-billion-smartphone-manufacturing-plan/
https://www.ibef.org/industry/pharmaceutical-india.aspx
https://www.ibef.org/industry/manufacturing-sector-india.aspx