The price of goods and services is going up. Last month, consumer prices rose by 6.2% annually, a much higher rate than in past years. Everything from food to auto loans, housing to gas is going up. U.S. News & World Report says it’s the sharpest increase since the 90s. If you’re hearing the word “inflation” a lot lately and wondering what that’s all about, this blog will help you understand the daily impact of rising prices on your salary.
What is Inflation?
Investopedia says, “Inflation is the decline of purchasing power of a given currency over time.” As the value of your money drops, it makes the goods and services you purchase cost more. As prices rise, you ultimately get less for your money. Investopedia illustrates this by showing how much a cup of coffee has increased since the 1970s:
- In 1970 a cup of coffee cost .25 cents
- 1980: .45 cents
- 1990: .75 cents
- 2000: $1.00
- 2010: $1.25
- 2019: $1.59
Inflation can be a good or a bad thing, depending on your assets and overall financial perspective. For example, if you have investments or tangible assets that translate to cash, such as property, inflation may raise the price of these holdings. But if you’re living paycheck to paycheck with no assets, inflation can be a big budgetary concern.
Tips for Overcoming Inflation
Balancing your salary against an increase in inflation is tricky. Your money simply won’t stretch as far when the cost of things rises. How to deal with this? Forbes recommends asking for a raise to offset the impact of inflation. At the end of the year, it’s traditional for many companies to conduct performance evaluations and offer profit bonuses or salary increases. Forbes suggests, “This year, instead of waiting and hoping for a raise, be bold and ask for it.” They suggest sharing the inflation numbers to justify a salary increase. We think this is a solid approach, and you can read our 10 Tips for Negotiating Your Salary to find out just how to do it.
Legendary investor Warren Buffet suggests that investing in yourself by becoming the best at what you do is a great way to “maintain your purchasing power over time.” He suggests bulking up your resume by learning new skills. You can also learn new skills by taking a temporary job on the side to build up your experience. Finally, consider cutting unnecessary expenses to stretch your paycheck a little further.
Contact Us to Learn More
If you approach your employer about a raise and for whatever reason don’t receive it, you have options. Consider talking to Lingo Staffing about the jobs available in your field. There are currently about 1.8 million job openings, so the market is ripe with opportunities for you and your family. Lingo Staffing offers a free consultation to job seekers considering their salary options next year. Call on us to find out more.