Inflation and Personal Finances
What is Inflation?
Inflation generally refers to the increase in the price of goods and services in any economy every single year. Since prices are rising every single year it means your purchasing capability decreases a lot which means for you to buy a certain item every single year you have to increase your Income at least on par with Inflation or even more.
So if you are someone who is getting increments on your Salary lower than the current rate of inflation in your country then you should start considering how your Finances are and if you are financially stable or not. So if you are wondering what effects Inflation has on your Financial Journey then check out these pointers.
1.Purchasing Benefits
Inflation eats away at the purchasing power of the general public as things get costlier every single year while they are stuck earning the same amount every single year this means if you were able to afford to buy 1000 Kg of Rice last year then this year you might only be able to buy 940 Kg of Rice.
2. Erosion of Savings
Inflation can also eat away at your savings if you are among the 70 percent of people who invest in assets like LIC, FD, or RD and other savings schemes where the interest you gain is less than the percentage of Inflaton then rest assured you are losing your Money as Inflation is slowly eating away your Money.
3. The Government
It is no secret that the government kind of controls how much Inflation should or should not be by the change in Repo Rates and these things are done in accordance with any major event in our Country or in the world which really makes a lot of difference as the government may feel like keeping the Inflation at 5 percent but the Consumers ultimately get an Inflation of over 7 percent.
So it is crucial for individuals to know about Inflation and its effects on their Finances as that will definitely help in us be Financially responsible with our Funds and the places we invest those funds in. So if you want to beat Inflation then you have to be proactive with your Investments and calculate which Investments are good for you both in security and returns.
This is my participation post for the March Monthly Prompt Initiative
Please do check out the above post if you are interested in participating in this Initiative as here you will get one topic to write on every single day of March.
Posted Using InLeo Alpha
Posted Using InLeo Alpha