Hey there everyone… Many have asked how they can avoid the effects of inflation. And after giving it some serious thought I have a story for you.
Alright kiddos, gather round! Today we’re gonna talk about inflation, and how it can affect our precious pocket money
Who Wants Some Gum?:
Now, imagine you have five pieces of your favorite bubble gum, and suddenly the price of bubble gum goes up. In fact, when you go to chew some, instead of the five pieces, you find you only have three. And now you might not be able to afford as much bubble gum as before, and that would be a total bummer, right? That’s kinda like what happens with inflation..
Because there is so much ” Gum” (or actual pieces of dollar currency) that it cheapens and lessens the value of the rest of the stash.
Key is to have a limited number of the items so it can retain the value in the minds of those in the community and in general..
The Grumpy and Horrible Inflation Monster:
Now, who’s ready for some gum?… wait, well, hold on there, before we get to the actual gum, let’s talk a bit more about inflation. Don’t worry, there are ways to protect ourselves from that sneaky and sinister inflation monster. One way to protect ourselves from inflation is to keep our credit score nice and high. By so doing, keeping an eye to what is being placed up on all those records of Equifax, Experian and Transunion(sometimes it isn’t always the truth) and disputing anything you do not recognize, can help to keep things squeeky clean.
That way, when we need to borrow money, we can get a good interest rate and not have to pay as much back in the long run.
But you can do something so that you don’t even have to borrow ANY money.
Having Different Buckets:
In our metaphor of getting our favorite bubble gum, instead of only getting our delicious Hubba Bubba, the way we can keep ourselves from experiencing this value crunch, as we can get other types and flavors like Double Mint or Mentos Gum as well.
Just like how we shouldn’t put all our gum in one type or flavor, we shouldn’t put all our wealth into one type or form (just currency, just stocks, just bonds, etc).
By spreading our investments out, we can reduce our risk and protect ourselves from inflation’s effects.
Protecting Our “Gum”:
Well, hold your horses for a bit more, let’s move on to talking about another way to protect yourself from inflation; Specifically investing in Commodities.
What are commodities, you ask? Well, they are things like gold and silver, oil, and other raw materials that are traded on the stock market around the world.. Investing in commodities can be a great way to protect your money wealth from inflation because their prices tend to rise or retain their value as inflations effects rise..
Of course, investing can be risky, so you should always talk to an adult that truly understands how all this works before making any hard money investment decisions.
And speaking of learning, did you know that by understanding how inflation has acted in the past, can help you appreciate the need to take measures to protect your finances from it’s negative effects?
That’s right, inflation is not a new thing at all, and it has been around for centuries. So by learning how inflation has affected economies in the past, you can better understand why it’s important to put strategies to alleviate it from adversely hitting your wealth’s value. and how you can best take the steps to protect your finances today.
Don’t be a Stick In The Mud:
One of the ways people lose out on retaining their wealth is that they keep it in forms that can be devalued, or taken in a moment’s notice. The tactic of converting your dollars into precious metals, for instance, is not something that the regular Joe Shmoe thinks about, or ever crosses their mind for that matter.
One of the best ways to protect your “bubble gum” is to invest or convert your wealth into gold, silver or other precious metals that can hold its value even when prices for everything else are going up.
Gold and Silver have been valued for thousands of years for their rarity, beauty and utility. It is universally accepted and acknowledged as a store of wealth or value. As such, when you put your wealth into hard money assets e.g. precious metals, gold, silver and the like, it retains it’s value against paper money. Owning Gold or Silver can be seen as a form of insurance against worst-case scenarios.
Remember, managing your finances is an important life skill that can help you achieve your goals and live the life you want… Start learning now, and getting that Bubble Gum Insurance now.
Now, let’s do a quick recap of what we’ve covered today. Inflation is the gradual increase in the price of goods and services because of too many dollars that are out in the market. Of which can reduce the value of your wealth if it remains in the form of dollars..
To protect yourself from inflation you can retain your money’s value by: Diversifying your investments, invest in certain commodities or move your wealth into more stable forms like Gold, Silver and even real estate.
At the very least, maintain a high credit score rating and you can avoid losing all that proverbial bubble gum you have worked so hard to get!