A Mcdonald’s combo now costs $7 but it used to be less than $5. Then again, the McChicken sandwich used to cost $2.45 and it’s only a buck now.
Inflation is a phenomenon that most people hear about often. The media reminds us of it, our financial planners talk about it and if you need a play by play, just talk to grandma for the nickel Coca-Colas that they save their money to buy.
Inflation is real, inflation is scary and inflation will erode our purchasing power. But yet, inflation is exaggerated.
Don’t get me wrong. Our expenses do go up, but inflation is hardly the reason. We spend more because we managed to find a faster way to use our money. Cell phone? Not needed 20 years ago. Texting? Maybe in the last 10 years. Internet? Try 5.
Our expenses go up because we found more luxurious ways to spend out time. We needed more. Nono, we wanted more. And the companies that supply services? They are working 24/7 to come up with products that we don’t need… yet.
Want to mitigate the cost of inflation? Drive less and even higher gas prices seem less of a problem.
Retirement Savings and Inflation
Many financial planners like to use your current income as a gauge for retirement calculations. “In order to have similar spending power, you need to have X saved up by the time you retire.” Similar income? What if I save 50% every year? I don’t need to withdraw 100% of my current income and adjust the numbers yearly. If inflation is 2%, make that 1% for me.
- Don’t save as much? How about not needing as much. If you still live in the same house, don’t complain about a higher utilities bill. Figure out why you need twice the space per person after you kids moved out.
- Want to travel around the world? Perfect, but please don’t blame inflation.
- Worried about inflation? Stop buying another TV and who cares how much they costs these days?
Look. Some expenses do go up. Gas, groceries are two that seem to go up without reason at times. Yet, that’s such a small part of our budget and if things do get out of hand, there are alternatives available. Organic food makes so much sense, but you grew up without it. If you can afford the extra cost, then buy it because you can and you want to.
Never blame inflation. Omega-3 eggs are healthier, but you didn’t need them before it was introduced to the market.
It is just a personal choice, and it’s all up to you.
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