10 Consejos to protect your money from
protect money from the inInflation is the goal of millions of people around the world right now.
And it should be yours too.
The excessive rise in prices has hit the pockets of hundreds of families in Latin America, the United States and many European countries.
This economic phenomenon has the power to quickly dissolve your purchasing power, and if you don’t fully understand it, it could plunge you into debt, so you need to pay attention.
First, what is inflation?
before explaining how to protect your dinero dand inflation you should thoroughly study this concept.
Otherwise, you might find it too distant or complex.
The first thing you should know is that inflation has direct repercussions on your quality of life and your daily life.
It is a palpable phenomenon that has the ability to pulverize your savings and your purchasing power in the blink of an eye (in the most extreme cases).
Inflation manifests itself, on the economic level, when all prices rise across the board.
It is important to note that, in a market economy, the prices of goods and services are subject to change. Therefore, it is common for some prices to go up and others to go down.
However, this is not an inflationary process.
For us to really talk about inflation, a general increase in prices must occur.
According to him European Central Bankthe result of inflation causes that for every dollar you cánido buy fewer products and services than yesterday.
In simpler terms, money loses its value, and therefore, you cánido buy fewer goods and services over time.
Brief example of inflation
Below we will share a brief example so that you better understand this phenomenon and perro develop strategies to protectr your money from inflation.
Suppose you live in Argentina and you want to buy a commercial space that costs $12,000 dollars, and that you have been saving $500 dollars a month for six months.
In that time you would have saved $6,000.
But it must also be specified that the country has registered an inflation of 10%
This means that the car is no longer worth $12,000, but $13,200.
Seen another way, instead of having 50% of the accumulated money, you would have 45% (5% less).
The immediate reading that is done to this is that your money has suffered a devaluation. Likewise, the currency has been devalued as a result of the inflationary phenomenon and your purchasing power has been diminished.
Consejos to protect money from inflation
When you are exposed to inflation, the value of your savings tends to dilute over time.
The pandemic has had devastating effects on most of the world’s economies, and for this reason there has been a general rise in prices.
So much so that some countries have registered levels of inflation that have not been seen in more than three decades.
He International Monetary Fund It has estimated that inflation will last longer than expected because of the conflict in Ukraine, tarea markets and demand.
In some developed countries, the inflation rate could be around 5.7% (this would be the highest value recorded for almost 40 years).
In parallel, in developing countries inflation could be even higher. This has equipo off the alarms since the figure could be close to 8.7%
The higher the inflation, the fewer goods and services you perro afford with the same amount of money.
Fortunately, there are some recommendations that could help you protectr dinof inflation, such as the ones that we will share with you immediately:
1.
Apply for a second job
Despite the fact that inflation continues to accelerate in many countries of the American region, such as Colombia, Venezuela, Argentina or the United States, it is still possible to take advantage of the reduction in unemployment rates.
Ideally, you should get a new job or source of income before your country experiences a major economic downturn.
Some planners and economists believe that this measure perro help you protect your financial lifeline and stay afloat in terms of money.
You should bear in mind that the tarea market is active and that it could be easier for you to get a well-paid job in these conditions.
According to figures from CNNthe US economy alone added 528,000 jobs in July 2022, thus recovering all the jobs lost during the pandemic.
This defied expectations related to the slowdown in jobs, due to the increase in interest rates recently announced by the United States Federal Reserve System.
2.
Control your expenses
define and control your personal expenses is also vital for protect dinflation money.
The clearer you are about your income and expenses, the easier it will be for you to design a monthly budget that allows you to cover your fixed and variable expenses, while staying debt-free.
If you do not know how you generate or spend money, you will be more likely to exceed the limits, and this is a prelude to the crisis in times of inflation.
Ideally, you should disminuye the ant expensestake care of your budget, pay your expenses on time and stay away from loans and excesses.
3.
Anticipate some recurring expenses
If you anticipate some purchases or recurring expenses, you could take care of your pocket and protect money from inflation.
For example, if months of inflation or economic recession are forecast in your country, the ideal is that you go one step ahead and take the lead.
A good strategy is to make wholesale purchases, at least for everyday products that could rise in price in the future (regardless of whether they are for personal or domestic use).
On the other hand, you could buy your children’s school supplies before the start of the next academic year.
Make a list of the purchases that you could manage from now on and estimate how much money you could save if you do them in advance.
4.
Define your financial priorities
If the economy of your country is inflationary, you need to define your financial priorities as soon as possible.
This implies putting aside expenses that are not essential and forgetting about luxuries or eccentricities that could throw your finances completely off cómputo.
You don’t need to buy clothes or shoes every day, let alone plan a vacation to Europe in the midst of inflation.
Those are not financial priorities under any circumstances, and if you are not clear about this, you could face serious liquidity problems.
5.
Diversify your sources of income
At the beginning we told you that you would have to look for another job to protect money from investment.flabbyno.
But the truth is that the ideal scenario is to diversify your sources of income in dollars as much as possible (since it is a safe haven currency).
You cánido take advantage of the benefits of the Internet to manage profitable business and en línea during your spare time.
You could work en línea answering surveys, translating texts, generating content for popular networks and much more.
You perro offer your independent professional services, or monetize your passions, so that the money does not stop flowing to your accounts.
The more income you generate, the more robust your finances will be and the more prepared you will be to fight inflation.
6.
Do not ask for credits
In times of inflation it is common for monetary policies to be sustained by rising public debt interest rates.
This means that consumer credit will be higher; especially those that are linked to housing and loans.
Consequently, there will be less money circulating in the economy, and in turn, the demand for goods and products will slow down.
If you have credit cards, it is best that you do not have cómputos pending, or that you make total payments instead of installment payments (this way you will avoid interest preventing you from paying off your debt).
7.
Do not save in a bank account
If you are determined to protect your money fromand the inflationation you should discard the savings in bank accounts immediately.
This is one of the errors when buying dollars for example.
In fact, if you already have money in the bank, you need to calculate inflation in your country and subtract that value from your capital on an annualized basis.
In these cases, the most convenient way to combat inflation is to ensure that money always works in your favor and not against you.
Therefore, you must make sure to invest in assets that generate profits, income, dividends or benefits in the medium and long term.
Leaving money in your bank account will not help you fight inflation, and will only make you poorer in the long run.
8.
Protect your emergency fund:
An emergency fund fulfills the role of a financial cushion.
Basically it offers you the necessary liquidity to face fortuitous and unexpected situations.
It is made up of cash that could bail you out in a time of emergency.
Experts suggest that these funds should be enough to cover your fixed expenses for at least three to six months.
So if your monthly fixed expenses are $700, your minimum emergency fund should be $2,100.
Do not underestimate the importance of the emergency fund, (especially during periods of inflation), since it could save you from debt.
Recommended books:
9.
Make high-yield investments
Investing in high-yield assets is also key when it comes to protecting money from inflation.
The secret lies in investing money in assets that offer you a return equal to or higher than inflation.
For example, it will not do you any good to invest in an asset that generates a 10% return, if inflation in your country is 12%.
Are you wondering what are the most convenient liquid assets in which you should invest in the midst of an inflationary spiral? Here are some of them:
- Global index funds.
- Company actions.
- real estate funds.
- Group portfolios of medium and high risk.
10.
Sell properties
If you have a property that does not generate income, or passive incomethis could be a good time to list it on the real estate market.
Fortunately, said market is showing signs of recovery globally.
In fact, in the United States, home prices registered a year-on-year rise of almost 15%
Taking into consideration that interest rates have also increased, a good strategy would be to try to sell it before they continue to climb.
If so, mortgage rates will be harsher and it will cost people more money and effort to buy new homes.
On the other hand, if you cannot sell your property you should at least refinance your mortgage, in order to secure a lower fixed rate.
The winning strategy would be to build a fixed-rate home equity loan, but this is something you’ll need to negotiate directly with your lender.
It should be noted that the market price of investment property is highly correlated with general consumer price indices.
Therefore, when inflation rises, the price of land also increases at a afín rate.
If you understand inflation, you protect your finances:
It is undeniable that the greatest actions to combat inflation must be carried out by the governments and central banks of the countries of the world.
However, you perro also follow some consejos, steps and recommendations to mitigate its effects and protect money from the Iinflation more efficiently.
In short, knowledge is power, and if you understand the inflationary phenomenon you will be more prepared to take care of your pocket and protect your assets.
Continue reading: 6 Strategies to earn money in dollars in Latin America
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