It might have dawned on you recently that everything seems to be more expensive but why is that? Unfortunately, there are a number of factors at play.
You’re not going crazy…that tasty burrito you just bought is actually more expensive than it was a few months ago.
That new Macbook you really need because your old one takes forever to open your email is going to cost more right now.
Even your beautiful goldendoodle is going to have to go on a diet, because yes, inflation is here.
We feel it when we’re dining out, going grocery shopping and especially when we’re filling up on gas.
So why is this happening and what can we do about it?
People are still arguing about the root cause of the recent inflation, but they all agree that one of the main reasons is the pandemic.
While we were sitting at home firing out blog posts in our sweatpants or becoming addicted to TikTok (we definitely caught a vibe) so were the people who staff the factories and farms that make a lot of this stuff.
But our appetite for these things didn’t stop. If anything being stuck at home made us order even more. Even though we were in lockdown, we still bought pet food, ground-beef, laptops, cars, lumber, etc. So all the supplies of these things were run down. And now as we emerge from lockdown and start demanding more, the factories and farms can’t keep up.
One of the basic laws of human history has been that when the supply of something goes down the price of it tends to go up. That’s as true for pristine conditioned, 1989 Air Jordans and Hermès Birkin bags as it is for basic stuff like food, fuel, and computers.
It’s also true for workers. They are now quite rightly demanding more money to come back to work to offset the rising living costs.
Well there’s a number of ways that people have used to protect themselves against rising costs:
Are other people making more money doing what you do elsewhere? The salary that companies are prepared to pay will keep increasing as prices keep going up, so it’s always worth making sure you’re properly valued. If you do find a better offer perhaps it’s time for a conversation with the boss.
If prices increase by 5% a year, and you’ve got $1,000 in a savings account that’s paying you 1%, you’re actually losing ~$40 of your savings a year.
Many things you can invest in can help you protect your savings better than a savings account as prices go up. Here’s a good overview from our friends at Experian on how to invest your money when inflation is high.
Understanding what’s making prices go up and down means that we can take advantage, whether it’s negotiating for more money, taking the opportunity to start investing or maybe just buying a year’s supply of laundry detergent while it’s cheap like billionaire Mark Cuban.