One of the many reasons I wrote the book Get WalletWise resulted from watching my grandparents struggle with money in retirement during the 1970s. They were on fixed incomes and regular price increases made it incredibly difficult for them to balance their budgets. My mother kept everything, and I have relived their trauma recently by rereading the letters between my grandparents and my mom. My grandmother living in New York complained regularly about the high price of heating oil and the expense of oil heater maintenance that she could not afford.
Inflation is painful!
So, what is inflation? Economists define inflation as “too much money chasing too few products and services”. Our Federal Reserve has increased the money supply, while Congress has washed the citizens of the United States with so-called free money to keep the American economy afloat. The “keeping the economy” afloat process worked, but at what price?
We are about to find out. It’s called inflation. Higher food, gas and everything else prices are the result. Inflation reduces the value of the dollars you possess to purchase goods. All else equal, the price of the product you want increases. Buy less or go without to keep your personal budget in check. Then you ask your boss for a raise. (You are actually getting back to even.) Your boss agrees and raises prices of the goods and services that your company produces, starting an evil cycle that can only be solved by slowing down the economy, usually by shrinking the money supply and raising interest rates. Unfortunately, this creates bottlenecks in the marketplace and increased volatility in the investment world.
Did you know that there is a good reason for inflation? The Federal government pays off our giant Federal debt with cheaper dollars. Does that mean there is a motive for the government to let inflation happen to us? What do you think?
This is the time to Get WalletWise. Why?
1. It is important to have a realistic personal budget that has room to handle higher prices on the basic goods and services that you need.
2. Keep credit accounts low to avoid paying high interest fees.
3. You need an emergency fund to avoid having to rely on credit cards to fund unexpected expenses.
Get a copy of Get WalletWise now and make sure your wallet is ready for this new era of inflation!
Check out www.walletwise.org a hub of free money management tools.
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