Impacts of Inflation

Inflation is often discussed but rarely understood. Inflation is simply a measurement of the increase of prices over time. To determine the official inflation rate, the government measures price changes in a basket of goods, including healthcare, housing, and education costs.Inflation can be government-induced through money printing, consumer-induced through a long-term increase in spending (demand), or manufacturer-induced with a broad decline in production (supply). Right now, all three of these reasons are causing inflationary pressures in the U.S.I believe that inflation will be high for the next 1-3 years based on the government’s current monetary policy. When it comes to the long-term impacts of inflation, you have three options: (1) do nothing and watch your purchasing power erode your savings, (2) decrease your spending, or (3) grow your income.Of these three options, I prefer growing your income because (1) it indicates that you are increasing your market desirability through increased productivity, and (2) it indicates that you are growing in tandem with the economy. Choosing to develop your skills and abilities is the only way to be prosperous in the future.So, as inflation persists, choose to become more productive and build your future!