We all want enough money to feel financially secure. This means that we look for ways to build our assets and develop different revenue streams.
However, when it comes to cultivating income, many of us forget about the impact of inflation. Unfortunately, inflation can have a very real affect on your income. If you want to build a comfortable income that lasts, it’s vital that you consider the impact of inflation.
What is Inflation, and Why Does it Matter?
Inflation is the erosion of your spending power. It’s sometimes referred to as a reduction in the value of the dollar, or as a rise in prices. No matter how you frame it, inflation impacts you by making your money worth less later than it is worth now. Think back to a grocery shopping trip 10 years ago. You could spend $100 and have a decently full cart. Now think about how many groceries you can purchase with that same $100.
Chances are that your cart is less full now than it was 10 years ago. You either need to accept less food for the same amount of money, or you need to pay more money in order to bring home the same amount of food. It’s fairly easy to see how inflation can affect your income. In “real” terms, a raise from your boss may not be a true raise after all. It may not increase your buying power at all; you might only be lucky to keep pace with inflation. [Read more...]