It’s impossible to read or watch financial news right now without seeing this word. For those old enough to remember the late 1970s through early 1980s, inflation was something to be feared and fought against like a forest wildfire.
So, what is inflation?
Here’s an explanation from a recent Forbes article on the topic:
“Inflation occurs when prices rise, decreasing the purchasing power of your dollars. In 1980, for example, a movie ticket cost on average $2.89. By 2019, the average price of a movie ticket had risen to $9.16. If you saved a $10 bill from 1980, it would buy two fewer movie tickets in 2019 than it would have nearly four decades earlier.
Don’t think of inflation in terms of higher prices for just one item or service, however. Inflation refers to the broad increase in prices across a sector or an industry, like the automotive or energy business – and ultimately a country’s entire economy.”
If you have thought of buying or selling a home in the last year or two, you’ll be able to make the connection to prices that accelerate quickly! As the Forbes article points out, though, the inflation that you need to be concerned with goes well beyond a single sector such as real estate.
We are certainly living through an interesting time as people go back to offices and life after the main impact of COVID-19 has passed. There is a pent-up demand for many things that can influence prices on everything from meals at a restaurant to a tank of gas. This is likely to settle down over time as supply rises to meet the demand and things return to a more normal pace.
In the meantime, I recommend that you do a few things to bring greater peace of mind and financial stability:
Review your finances and budget. Know what your needs are and where you can conserve if necessary.
Have a financial cushion. An emergency fund of just $1,000 can be the basis of feeling peaceful and prepared. More substantial savings will buffer you against temporary price increases and reduce feelings of anxiety.
Talk to a professional. Now might be a great time to get a professional involved to review your debt structure, monthly cash flow, and financial goals. An expert outside party can often spot ways for you to organize things and bring a greater sense of control no matter what the markets are doing.
Please drop me an email or call if you have any questions – or someone you know is in need of expert advice. I love to help those you care about. If you have a referral please click the button down below. Your referrals are the heart and lifeblood of my business.
Mission San Jose Mortgage
2111 W. March Lane, Suite B100
Stockton, CA 95207