If you’re not up to speed on your economics or finance, inflation may not be the most straightforward concept.
Regardless of what you do or don’t know, it affects our lives and those of everyone around us.
Whether you’ve been creating an emergency fund, planning to invest or just having a conversation about money, we’re sure you’ve heard about inflation.
Nevertheless, most people don’t really try to understand it in depth. And this makes sense - it’s a complex concept, and often you don’t need to know the ins-and-outs of it.
However, we believe it’s important to learn the basics.
Not only can this help you make better financial decisions but also maintain financial stability during economically trying times.
In this article, we are going to help you understand the concept and give you a few simple tips on how to deal with inflation.
What is Inflation?
The textbook definition of inflation is something along the lines of, “A general rise in the prices of goods and services in an economy, resulting in a decrease in the purchasing power of money over a period of time”
Said in the simplest words, however, inflation is when money loses its value and becomes worth less than what it used to be. You may have the same amount of pounds available, but what you can buy with those pounds becomes less.
Some inflation is necessary, but the rate of inflation has been increasing significantly the last few years, particularly this year. Ensuring you’re well prepared is absolutely crucial.
We are going to help you with a few tips on how to deal with inflation and protect yourself from its ill effects.
1. Get Your Loans and Mortgage at a Fixed Rate
In trying times, everyone turns to personal loans. However, when it comes to loans, you need to ensure that you are getting them at a fixed rate.
With our “More than you score” loans, you can get fair personal loans without having to worry about your credit score being used in the initial lending decision.
Similarly if you have a mortgage, choosing a variable interest rate can be expensive as the interest rate adjusts to inflation. However, with a fixed interest rate, you can save yourself from inflated interest rates and save money over time.
2. Create an Emergency Savings Account
The best way to deal with inflation is to make your money work for you as much as possible. While other investments come with great interest rates, they aren’t easily accessible.
Therefore, it is essential that you put some amount of money into an emergency savings account where the money isn’t idle and can be used whenever needed.
Whilst the value of that money will decrease over time, having a nest egg to fall back on is something you’ll always thank yourself for.
3. Adjust Your Standard of Living
This isn’t an easy topic to talk about and isn’t something any of us want, however, managing your expenses in order to ensure you’re managing your income effectively is another great way to deal with the uncertainty of inflation.
We are not suggesting you sell all your stuff and live in a cave, but try to reduce your expenses wherever possible and save the money or invest, if you can.
4. Find Ways to Increase your Income
Again, this is easier said than done, but working to find new ways to increase your income is probably one of the greatest ways to battle inflation.
During a recession, inflation is at its highest. It’s also when unemployment rates typically peak. In such trying circumstances, most people have trouble finding income sources.
Therefore, in order to prepare for it, it is important to find ways to increase your monthly income from different passive and active income sources.
Choose Salad Money for Fair and Affordable Personal Loans
Now that you have some brilliant tips on how to deal with inflation, it’s time to use these ideas and be prepared.
However, in these times if you find yourself in need of some emergency money, you can rest assured that Salad Money is always here for you.
With our “More than your score” loans, you don’t have to worry about your credit score being used in the initial lending decision. Our fair affordability assessment system helps us provide you with the best loans without considering your credit score.
Applying for one of our new loans doesn’t impact your credit score. We use Open Banking in our initial assessment. If successful, we report your loan to the CRA’s (Credit Reference Agencies). Your credit score won’t hold you back from being eligible.
To learn more about our services, visit our homepage or get in touch with us now!
