Is it Coming?..... 5 Practical Ways to Offset Potential Inflation or Hyperinflation

Opening my banking app, I noticed a pending deposit for another stimulus. You would think my initial reaction would be joy at receiving this huge boost to my family’s budget. It was not! My initial reaction every time I have seen these notifications has been momentary panic.

My brain freaks out, my heart begins to race and I wonder if this might be what the start of a panic attack feels like. Let the record state that I am a very calm individual and take most of life in stride with rare episodes of true alarm or anxiety. But these random gifts of large proportion from the government are making me very uneasy.

My degree is in Humanities and Business and though I am not an economist, I am astute enough to wonder where all this money is coming from and who is going to pay for it?

If I wanted to be the “good parent” and I kept borrowing money and giving my darling children extravagant allowances and gifts, they would be floored. They would think I was the best! They would use the money to buy great toys or cars or whatever their little hearts desired. And I would look SO good. They would love me forever... Well, until the day those bills came due and I could no longer pay them. Until the day we lost our home. Until the day I had no retirement and needed my adult children to care for me because instead of planning for the security of theirs and my own future, I had lavished them with fabricated gifts.

This is why I am so terrified. In the interest of buying votes and good will; and with the hope of helping the American people through this hard pandemic time; our government is simply printing money and gifting it to most of us.

Do you know what happens when a government simply makes more and more money?

I think you do know.

And I think you have already begun to discover what happens. Have you been to the grocery store lately? Have you noticed the cost and the value of homes rising at a rapid rate?

Here is what Doug Butler, Senior Vice President & Director of Research Services at Rockland Trust in Boston has to say, “While we don’t see inflation as a problem on the immediate horizon, the tremendous amount of fiscal and monetary stimulus could finally trigger inflation in late 2021 or 2022.” He shared this sentiment last May and if you have gone shopping recently, I expect you have noticed that this appears to be on target.

Very simply, as the money supply increases the cost of goods also increases. It appears that we are heading into a state of increased, if not rapid, inflation. I pray we will not hit hyperinflation but it is a realistic possibility and there are some things you can do to prepare now in case this happens.

Incidentally, if this prediction is wrong, taking the following actions will still put you in a better position than if you did nothing.

1. Emergency Fund

Traditionally we are advised to have an emergency fund.” This is still good advice. However, if inflation is an issue, money saved now will be worth less as time passes. Many people are putting a portion of their emergency fund into tangible goods. Things they will be able to use no matter what the economy does.

• Shelf Stable Food
• Extra vitamins
• Dry Goods
• Seeds
• Firearms and ammunition also seem to be popular

2. Eliminate Debt

Get out of debt. In the case of hyperinflation it feels a bit counterintuitive to say "pay off debt," but it is still a sound strategy that puts a on a much safer financial platform than being in debt. If you do not owe anyone money, it is much easier to adjust your life or expenditures or job than if you are encumbered by debts.

3. Cut expenditures

Reduce your expenses. Find ways to go back to basics. If this is a foreign concept, you can work your way to becoming quite frugal and possibly even outrun the inflation, at least in one of the areas we are already seeing steep price increases: food.

Here are some progressing suggestions. Each could be an entire article by itself.

• Instead of eating out -- buy pre-made food at the store.
• Instead of buying pre-made food at the store -- cook at home from prepared ingredients.
• Instead of buying prepared ingredients -- make your food completely from scratch.

Here is an example:

Replace tacos from a restaurant with tacos front the freezer section at the grocery store. Then try buying canned beans and taco shells etc. and making your own tacos. Finally buy dry beans and corn meal in bulk and make everything from scratch.

If you translate this example to your entire meal plan, you will be healthier and wealthier.

• Grow a few herbs.
• Plant a whole garden --The pandemic has inspired many people to get into gardening. The benefits of growing your own food go far beyond the money you save. (This is another article for another day though! :) )

4. Buy Real Estate

In situations of financial uncertainty, owning your own home is one of the best investments you can make.

5. Invest Wisely

If you do have money available to invest, there are many inflation wise investments out there. This goes beyond the scope of this article but a good financial advisor can often assist you with protecting against inflation. Typically, diversifying your portfolio, including stocks and commodities and remembering you are investing for the long haul are good strategies to keep in mind.

These five strategies are sound no matter what our economy does over the next year or decade. In the case of either high inflation, deflation or depression, learning to live debt free and spending less than you make will help secure a more stable future for you and your family.

Thank you for reading. As a Financial Coach, Life Insurance Agent/Advisor and a Thrifty Mother of five, I intend to begin taking at least some of my own advice!

advice!

: Financial Coach, Life Insurance Agent and Advisor, Thrifty Mother of Five!