Inflation is a common economic occurrence that can hurt the well-being of households, especially when it’s not offset by a comparable rise in wages. To reduce the impact of inflation on your family, you’ll need to draft a solid plan that includes what to buy, how to buy, what to curb, and what to invest in. In other words, you’ll need to prepare. So how do you prepare for looming inflation at home?
To prepare for inflation at home, you’ll have to:
- Stock up your home with the right things
- Negotiate lower prices on everyday expenses
- Delay big-ticket purchases
- Invest in other currency
Don’t want to feel the full heat of inflation? Then start planning towards it. Some families pass through serious financial difficulties when inflation hits, while others don’t, thanks to foresight and adequate planning. You can be the latter; however, you’ll need to know what inflation is, how it works, and how to prepare for one.
What to Buy Before Hyperinflation Hits?
How to Prepare for Inflation at Home?
To start this post, I’ll like to brush up on your knowledge of inflation. So let’s start with what inflation is.
Inflation is a continued upward movement in the general price level of goods and services in an economy. It corresponds with a loss of buying power for a currency used within the economy. It takes more currency units to purchase a similar amount of goods and services as a result. Your money gets you less, be it potatoes, home accessories, or even medical services.
Inflation results in a fall in purchasing power when prices increase more quickly than wages increase. It makes people spend more dollars, euros, or other types of currency to buy necessities, which can put the average customer in financial quagmire. It can cut discretionary spending, as well. For instance, you would have had to cough out $250 in November 2021 to buy what could have easily been purchased for $200 in November of 2020.
How Does Inflation Work?
Many people link inflation with a rise in the price of some key goods or services, like oil, or even a certain industry, like real estate. However, inflation is only evident when the general price of goods and services is increasing. Two primary forces are thought to be liable for the rise: demand-pull inflation and cost-push inflation.
With demand-pull inflation, the demand for goods and services in the economy surpasses the economy’s ability to produce them. This short supply puts upward pressure on prices, resulting in inflation.
Cost-push inflation happens when the skyrocketing price of input goods and services increases the price of final goods and services and results in inflation. An oil crisis always causes a slump in the oil supply and a rise in the price of petroleum, an essential input good. The rising price of petroleum puts upward pressure on the price of final goods and services, resulting in inflation.
Some investors may also lose due to inflation. A country’s central bank will always adjust short-term interest rates to keep the desired inflation rate. The Federal Reserve always raises a short-term interest rate regarded as the “federal funds rate” when facing increasing inflation. This move often leads to a fall in the price of fixed-rate securities such as fixed-rate bonds.
Stock up your home with the right things:
Inflation is characterized by an increase in the prices of goods and services. An economy suffering from inflation will experience a rapid rise in commodities prices. The result? A fall in purchasing power and a rise in the cost of living.
To prepare for inflation at home, you’ll need to stock your pantry with necessary household items. I’m not referring to only edibles. You’ll have to consider electronics, furniture (for those working at home), kitchen appliances, etc. Getting these items before inflation hits will save you a lot of money.
Negotiate Lower Prices on Everyday Expenses
You can negotiate a better deal on almost anything to prevent higher prices. Begin by creating a relationship with the merchant, then ask if there are any programs or discounts you qualify for. There is no harm in asking.
Streaming services, insurance premiums, cable bills, cell phone plans, and gym memberships, especially now, are perfect examples of recurring costs that are always negotiable, and so is the APR on your credit card. Consumers who reach out and ask for lower rates are almost often successful (based on studies ), and that can be a good tool for cutting down monthly expenses, especially when inflation is at the corner.
Delay big-ticket purchases:
Not everything will always be super-expensive. Some price increases could be short-term, and, in that case, it may pay to hold put.
You can delay purchases that are not immediately necessary. For instance, used car and truck prices, a primary contributor to inflation gains, are up 31.9% year over year but are beginning to retreat, slipping 1.5% in August. The chip shortage, which helped increase prices, is expected to reduce in the months ahead, and cars generally become less expensive toward the end of the year and into January, when dealers want to offload previous year’s models.
Invest in other Currency:
In addition to stocking your home with the right goods, you must consider investing in other currencies. If the American currency’s value plummets, others will increase in value (at least relatively).
Last time I checked, the Euro is 1.5 times the value of the revered dollar, but don’t quote me on it, Ensure you know what you are doing if you decide to invest in other currencies as this can be very dangerous, especially if you lack in-depth knowledge into how it works.
On the other hand, if you play your cards right, you will end up on top by diversifying your currency holdings in your portfolio of investments.
A good piece of advice: ensure you have the physical currency on hand, as purchasing “derivatives” of paper currency in the market can be exploited and leave you prone to risks than if you physically held it.
Credit Card Profitability Model
2017-2020 Inflation Rate as Seen in Different Countries:
What do the inflation statistics look like? What is the trend? How does the inflation rate of the U.K compare to that of other countries with a robust economy? Let’s take a look at these statistics.
| Year | U.S. | U.K. | Canada | Germany |
| 2017 | 2.13% | 1.55% | 1.60% | 1.51% |
| 2018 | 2.44% | 0.27% | 2.27% | 1.73% |
| 2019 | 1.81% | 0.55% | 1.95% | 1.45% |
| 2020 | 1.23% | 0.75% | 0.72% | 0.51% |
What does the Stats Say?
Judging from the statistics, you can tell that from 2016 to 2020, the United States maintained a high inflation rate (when comparing the four countries above), while Germany did a great job of keeping its inflation rate in check (until 2021).
In February 2020, the United States surged to 7.9% (highest since Jan 1982) and may rise further due to the surge in oil prices resulting from Russia’s invasion of Ukraine. Of course, you already understand the consequences of inflation. However, with the tips above, you should be able to reduce its effects on your household.
