The Impact of Inflation on Personal Finances
Dear & Respected Readers today I have selected an interesting topic which I thought might be of great interest for my dear viewers, the selected topic for today’s post is ‘The Impact of Inflation on Personal Finances’. The topic seems simple but it has a great impact on one’s life. We all know that the money inflation really impacts our financial positions, investments, sale and purchasing capacities.
In view of the above, the most important factor is that the money inflation disrupts the entire potential of ones purchasing, when the prices rises time and again the purchasing power goes lower as the value of money also decreases. So one has to reduce the purchasing.
Since the value of the money goes down therefore one cannot purchase what he used to purchase as per his need in the past, one has to reduce the number of its household items and goods, similarly the services prices also increase which also impacts the purchasing power of an individual.
A person has to rethink and re-plan its budget because the income or salary remains the same or even it is raised, even then it cannot cover the expenses. All the spaces and capacities such as; household items and materials, the medical expenses, food items and above all the transportation expenses, needs to be changed either, to balance the income with the expenditures.
If someone could make a comparison of the past and current year, such as; last years’ total income and its expenditures with the current years’ income and expenditure, the difference will be quite visible and will see that a great difference has occurred and this is all due to the inflation. The prices of products and the services increases while the income is constant so less products are sold and purchased.
Similarly, one has to re-look into the luxuries of life which he/she used to enjoy in the previous year so that has to be condensed as well. The inflation would also impact your savings and investments and therefore it forces to identify more opportunities of income to get the budget balanced. The important point is that the savings are not growing, one thinks that I have saved money it is basically losing the value since the rate of the interest is lower than the inflation rate.
As the value of the money falls down therefore it becomes essential to generate income to cover the inflation rate which is of course a challenging task but not impossible. For a businessman it might be possible to identify further opportunities to cover the costs of products and services expenses, to balance it while it is quite hard for person who is on salary or daily wages which is fixed, they face more hard challenges to balance their income with expenses.
Now coming to the point on how to manage the crisis and challenge, it is important to have a thorough thinking, re-visit and re-plan the budget in the light of the inflation. Since the inflation matter is unavoidable therefore possibilities are there to ease the effects of price increase. For example; to cope with this challenge, firstly, one need to develop a strategic plan to handle the expenditure, a simple way is to jot down the all the expenses, considering the income prepare a new budget for the expenditures and stick the prepared budget, no ups and downs.
This will enable to control overspending. Secondly, try and struggle to identify opportunities to generate funds keeping in view the price hike, if you are successful in the effort, it will definitely secure your expenses, part time/ online jobs are good examples for that. Thirdly, I would suggest to re-look the need of your household items/ materials, make it more concise and short (up to the need) as well as identify and select other company’s products which are more reasonable and can fulfil the need. This would also help to balance the expenditures.
Fourthly, the significant of all is that invest your saving rather than keeping it in the bank, invest the savings in whatever small business you feel would enable you to get more money on monthly basis, this can provide good return than the inflation rate. I believe that such actions and efforts would enable to cope with the challenges of inflation to a good extent. The decision is yours.
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