Inflation effects nearly all products or services, including housing, food, medical care, education, utilities, and discretionary expenses, like cosmetics, clothes, footwear, cars, smart phones and jewellery etc. All these make up a ‘market basket’ which make up the CPI (consumer price index) Other items included could be tobacco and beverages including alcohol, furnishings, transport, communication, culture and recreation hotels restaurants etc.
The CPI for individuals who live in different parts of the world will also be different. As per the latest (April 2022) data from Trading Economic.com, this is what the inflation numbers look like in percentages: China 2.1% Saudi Arabia 2% Switzerland 2.5% France 4% Singapore 5.4% Canada 6.7% UK 7% Germany 7.4% India 7.79% USA 8.3% and rising!
Over time, inflation reduces the value of our savings, as prices in general, go up in the future.
Calculate your personal inflation rate: Look at what you’re buying and check that with price changes.
Scrutinise your income, fixed expenses, discretionary spending splurging patterns. This is not rocket science and you can use apps on your smart phone to do this! List and calculate your personal expenditure. Be honest; fooling to justify to yourself won’t change what you are spending
- Eating out, restaurants/coffeeshops/bars. Many restaurants have been forced to raise their prices by 15- 20%. This also applies to takeaways.
- Personal grooming, do you go for the famous name/chain so you can showoff or do you go for quality at a reasonable price?
- Do you shop only at popular malls or, the markets next door, wait for sales?
- Do you role play ‘Santa Claus’ always buying gifts for others?
- Is retail therapy your go-to solution when depressed or stressed?
- Where do you buy your toiletries, detergents, cleaning liquids? Do you reach for the same/favored brand of soap, shampoo, skincare product, detergent when was the last time you checked the price? Since May 2022 there has been a hike of between 3-20% on FMCG
- Grocery shopping, do you order stuff online often from the conveniently stored shopping list on the suppliers website and just pay with your card not particularly noticing that the total bill could have gone up? (robotic buying)
- Do you have a credit system with the local/nearby shops where you call and order stuff (never asking the price) and pay cash at the end of the month?
A really fatuous assumption… In retirement I/they won’t need so much money as socialising, travel, updating wardrobe, footwear etc. will reduce, Says who? More retirees are traveling going on cruise vacations visiting rejuvenation spas and more!
Let’s say for argument sake that retirees ‘slow down’ because they are ‘old’ well, medical insurance skyrockets, medical checkups, diet changes, physiotherapy, optional medical procedures hip/knee replacement, immobility eat away into pensions/ retirement funds.
Inflation makes no distinction whether you are baby or a geriatric. You want/need something, you pay the price, cheaper or more expensive is not an option.
Research, Investigate, Educate yourself Be more vigilant, find out where to put your money so that it will continue to grow higher than the rate of inflation – SIPs, Mutual funds, Alternative investment, real estate, online trading etc.
Break up your money requirements into time frames 3, 5, 10, 15, 20+ years. You know your requirements your dreams, your ambitions! Plan your savings and investments based on your target amounts and timeframe including the Inflation factor.
Don’t compromise on your wellbeing, quality of life independence and self-respect.
As you get older your choices are reduced, Don’t let the silent thief i.e. INFLATION rob you! Use time and money to work for you. Keep up your purchasing power!