How to Protect Yourself From Inflation
INFLATION – it’s the big word everyone is talking about lately. And with good reason! Last month recorded the highest level of inflation since the early 80’s, at 7.5 percent. Obviously, this has major impacts on the economy as a whole. But we know that what matters most to us first is how it hits our own pocketbooks. So let’s talk inflation’s impact on you and what you can do to protect yourself.
Understanding inflation - Why now?
Inflation, simply put, is the increases in prices and the corresponding decrease in purchasing power. Typically, inflation of goods and services happens before there is an increase in wages. So as prices go up, the budget for most consumers is tightened. Often times, this happens seemingly sudden.
The turn of the new year brought a turn in the economy. Due to the global pandemic, there has been an unusual distortion of demand and supply. Over the last two years the public has shifted what they are buying and how much they are buying. And not to mention, there’s been a major nation-wide labor shortage.
What does inflation mean for me?
Consumers, like you and I, are always the first to feel the effects of inflation. Our wallets are hit first with increases in gas prices, groceries, services… the list goes on. As stated, increase of goods and services often happens before the increase in wages. This means your groceries and gas will become more expensive, long before you will see your pay go up. For most families, this puts pressure on their budgets.
Protecting yourself from inflation
There are some things you can do to protect your finances from inflation. Sticking to a budget, cutting back on groceries, carpooling – these are a few obvious ones. But the big one people don’t often think about is how owning a home can give you protection from price increases.
Here’s how. Buying a home locks in your monthly mortgage payment starting the day you close. And in terms of principle and interest, your payment doesn’t change for as long as you have the mortgage. You could see changes in property taxes and insurance, but this is much less than the price of, say, rent increasing. Especially this year.
What’s worse - we know that with an increase in inflation, an increase in rent is sure to follow. We have truly heard some horror stories lately about rents unexpectedly going up. We’ve heard clients tell us that their monthly rent increased $500 - $800! In one instance, we were told someone’s rent increased from $1,900 dollars up to $5,600 A MONTH!
Most people can afford this! And you shouldn’t have to take that risk either. Buying a home now can protect you. Talk to us today about home loan programs that could be good for you and fit your circumstances.
