Inflation is at an all-time high. The rising prices of goods and services are making it increasingly difficult for people to live comfortably. However, there are ways that you can inflation hedge your life and potentially live even richer without having to make significant changes. In this blog post, we will discuss some creative ways that you can protect yourself from the effects of inflation.
There are endless possibilities when it comes to inflation hedging your life. Click To TweetSome of them are surprisingly simple and easy to implement.
Let’s get started!
1. Rethink Your Habits and Lifestyle
When it comes to inflation, you have to be mindful of every penny that you spend. What are you spending it on? Is it for a solution, for solving a problem, for a brand? One way to do this is to rethink your current habits and lifestyle. Are there any expenses that you can reduce or eliminate? Can you find cheaper substitutes for the things you need without reducing your quality of life?
Chances are most readers can do a lot on this first point!
A lot of people suffer from what is called lifestyle inflation. This occurs when your spending rises along with your income. You may not even realize it, but as you get raises and promotions, your lifestyle slowly starts to creep up. Suddenly, you’re spending more on coffee, going out to eat more often, and buying nicer clothes. All of these expenses can add up, and before you know it, your lifestyle inflation becomes inflationary itself!
The more you give in to lifestyle inflation.
The more you’re robbing your future self.
Of course, this is not to say that you should never enjoy the fruits of your labor. But it is important to be mindful of your spending and make sure that your lifestyle doesn’t become too inflated.
If you are looking for ways to reduce your spending, here are a few ideas:
– Find free or cheap entertainment options in your city or town.
– Replace sparkling bottled water with a Sodastream machine.
– Start cutting your own hair instead of paying for haircuts.
– Make coffee at home instead of buying it every day.
– Bring lunch from home instead of eating out.
– Shop at thrift stores or consignment shops.
– Grow your own veggies in a garden.
In a nutshell, the golden rule here is: Never upgrade your lifestyle too fast!
If you’ve gone beyond that point, think again, reconsider, and reevaluate.
There are many other ways that you can cut down on your spending.
The key is to be creative and to find what works best for you!
2. Separate Your Wants from your Needs
Every person’s life is different, so there is no one size fits all solution. However, by being mindful of your spending and separating your wants from your needs, you can make a significant impact on your budget.
It is important to be mindful of the difference between wants and needs. Needs are things that you have to have, like food and water. Wants are things that are nice to have, like a new phone or a new dress. Getting crystal clear on these will help you reduce your spending. Make a list of the things you need and want, and then prioritize your purchases accordingly.
Needs:
– food
– shelter
– clothing
– transportation
– healthcare
– utilities
Wants:
– vacations
– entertainment
– luxury items
My own example here is the need for transportation:
I concluded there’s no need to use a car for it like all the time.
Transportation = need
Driving a car = want
A bike will bring you from A to B as well.
A bike will inflation hedge your car expenses!
Hence, we recently bought an electric bike and now save around 50% on the gas bill while maintaining similar flexibility. We simply canceled all the single-person non-shopping trips previously done by car and replaced them with bike rides.
When you fully comprehend the difference between what you need and/ or desire, you will better control your spending and save more money in the long run. I’m most certain there’s so much potential in this one for anyone, even for myself!
3. Create more, Consume less
Today’s society has an emphasis on consumption: It’s a feeling of life, you become what you consume! We are constantly bombarded with ads and messages telling us to buy this or that or else we miss out on life…
Inflation makes it even more difficult to keep up with the Joneses.
Instead of trying to keep up with your colleagues, neighbors, or the latest trends, why not try creating something yourself? Creation instead of consuming!
In terms of creation, think of anything from starting a blog, writing, cooking, to painting a picture.
Just do it!
This is nothing else than DIY!
By investing more time into becoming a creator, you will not only save money, but you will also enrich your life in the process and make it much more interesting: Learning new skills is a key to how to live a longer and happier life!
We have rennovated our basement ourselves (hey, I used to be a banker and no handyman!), it was hard but we are happy with the results.
So, next time you are tempted to buy something, ask yourself if there is a way, any way, you could create it instead. You’ll spend less time consuming and more thinking about how to morph into a creator instead.
No matter the outcome, chances are, you will be very glad you tried!
And just think of the money saved.
4. Finding New Substitutes, Alternatives and Options
Keep a very open mind for this one: Try to think of substituting certain things you usually purchase with new alternatives and options!
Focus on economizing money without sacrificing your quality of life. Click To TweetJust ask yourself: Does it have to be branded? Branded food, branded clothes, shoes? Does it have to be that particular item? Why not approach this with an open mind?
Higher gas prices made me rethink not just how often I use my car, but also where we refuel. Living in a city where three countries meet, we figured refilling in France suddenly got cheaper than in Switzerland and Germany and we started to substitute as well. This is called unlocking geographic arbitrage!
France recently lowered the taxes on fuel, furthermore, they offer a highly interesting option, their fuel comes with an option where 10% ethanol is added, which makes it cheaper again. Also, the EUR trades now 10% lower than a few months ago versus the Swiss Franc.
Now the new fuel option and solution to beat inflation costs us around 20% less than otherwise.
I’ll take that anytime!
And in combination with the biking part mentioned above which saves me 50%, we’re now covering transportation as an overall budget item cheaper than ever before.
While this is simply one of many possible examples of how to go about this, I’m most certain staying flexible about options will allow you as well to find new solutions to cut costs.
5. Buy in Bulk, Couponing, and Bartering
The more of something you buy, the cheaper it gets! This is especially true for food.
The level-up version of buying bulk are factory outlets. Factory outlets are a great way to buy branded clothes, shoes, food, and other items, whatever they produce, at a fraction of the price.
We buy chocolates and meat at the respective factory outlets around or town! Doing so, we not only make sure to support local businesses but also save so much, inflation becomes a non-event.
Also: Never buy nonperishable items [such as toilet paper] at full normal price. Buy a lot of them if and when they’re on discount instead. Look for special offers.
Are you familiar with the “To-good-to-go” App? Help bakeries, restaurants and other businesses taking over their left-overs at the end of the day, at superb bargain prices once again.
Couponing has also become increasingly popular again in recent years as a way to save money on groceries and other items. You can find coupons in newspapers, magazines, and online. There are even apps that will help you find coupons for things you want to buy. You can find coupons online, in newspapers, and even on products themselves. Many stores offer loyalty cards that give you discounts on certain items as well.
Bartering is an [ancient] practice where two people exchange goods or services without using money. This could be done with neighbors, friends, or family. You can offer to mow their lawn in return for them babysitting your kids. Or you take turns cooking up meals to be enjoyed together during lunch breaks? Be creative!
Conclusion
There are a variety of ways to inflation hedge your life.
It ultimately comes down to finding what works best for you. Remember: By being mindful of your spending, you can make a significant impact on your overall financial health without giving up too much quality of life.
This blog post has intentionally been kept short and focused on reducing spending, hence the whole theme of investing has been left out here: Investing in assets that increase in value over time is another great way to protect yourself from the effects of inflation. Learn how to start and later become a better investor.
Some people even consider borrowing more money: Outstanding debt [in purchasing power terms] is bound to shrink over time in an inflationary environment. This blog post should first and foremost cover simple hacks. Beware of using leverage and debt, it’s a great way but comes with another set of risks that would go beyond the scope of this post.
The above tips will help you make inflation work for you instead of against you. Implement these changes and start enjoying your life more.
Start living a wealthier life today by inflation hedging your life!
What are some other ways that maybe you yourself apply to inflation hedge your lives?
Share your thoughts and ideas in the comments below.
If you have any questions about inflation, investing, financial independence, [early] retirement, or life in general, consider booking a free consulting call with me right here.
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Get started today and inflation hedge your life!
Matt