October 14, 2008, 6:00 am

How To Beat Inflation Part 2

by: The Financial Blogger    Category: Investment, Market and Risk,Personal Finance
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Last week, we looked at ways to beat inflation through your investments. However, it is not really convenient to fight against inflation with your investment if you only have 25K in your RRSP / 401k portfolio. Therefore, we need to find other trick in order to keep our lifestyle intact. As inflation is a small percentage that seems inoffensive, tricks to beat it are as small. It is often in the smallest things that you can make a difference.



Save a buck and get a 50 cents reward

The first trick to beat inflation is to save money that you would usually spend. Saving is definitely the ultimate way to put money in your pocket because you are working on after tax dollars. So if you want to increase your cash flow by a buck, you need to earn $1,50 to $2 (that is my case in Canada) to net $1. However, if you save this dollar by being frugal, you don’t need to calculate the taxes.

Gasoline and food

There are several tricks to be found on the web in order to save on gas or on food. While I won’t list all of them, there are some tricks that will help you out getting money back in your pockets:

For Gas:

– buy a more efficient fuel car

– lower your speed on highways

– use the bus and metro to get to work

– walk! (it’s good for health and your wallet J)

– plan ahead in order to use your car less frequently

For Food:

– use coupons

– buy in bulk and buy specials

– plan your meal for the week (instead of wasting fruits and vegetables)

– buy a freezer in order to store more food

– find cheap recipes (ask Frugal Trader from Million Dollar Journey, he has some of them!)

Earn more money

While this may not be the most effective way to beat inflation because of taxes, earning more money is always a good thing! While some employers will tend to increase your income according to the inflation every year, it is not the case for all of them, especially when the inflation is going over 3%!

It is really important to keep up with the inflation rate as both your salary and inflation are benefiting from the effect of compounding interest.

Since I started working, I always gave more than what was expected. I concentrated on doing a good job on the task I was expected to do and then, I worked on other side project in order to improve efficiency at work. By only doing what you have been told to, you will be getting your pay check and that’s it. However, if you always do more, you have big chances of getting promotions or bigger raise years after years. Some people may say that they won’t work for free in the hope of getting something in return. I say that I always “worked for free” and I got 4 promotions in 5 years and raise that beat inflation every year.

If your overtime is paid, you can always work a few hours more to increase your salary. However, the problem is that you would have to increase the number of hours worked by 3% every year to keep up with the inflation!

Another classic of PF blogs when it comes down to make more money is to create an alternative source of income. I suggest you read more about this option in the series I wrote about it.

So hopefully you will be able to find your way to beat inflation and keep up with your lifestyles. If you know any good tricks, please share it on this blog so we can all benefit from them!

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Comments

Great article FB, and thanks for the link back.

The difficult but the significant part is earning more money. When we keep spending X amount a day, it is difficult to reduce the spending. Earning more money helps when in Savings and increased value of the same money when the inflationary risk subsides.

Lisa

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[…] Financial Blogger from The Financial Blogger presents How To Beat Inflation Part 2, and states that we need to find other trick to keep our lifestyle intact. Tricks to beat inflation […]