I’m getting concerned about rising prices and the possibility of high inflation. What can I do to keep up with these increased costs for gas, groceries, home improvement materials, etc?
Worried About Inflation
Dear Worried About Inflation,
Inflation is on everyone’s mind right now because it is a threat to our well being, not only individually but also nationally. It will help if I start with a true story to set up my answer.
Years ago, my wife and I lived in a region of Texas located in “tornado alley.” One afternoon, we were under a tornado watch. Suddenly, alarms sounded as the once clear skies turned to near darkness and winds began to howl, and a rush of fear came over us. Serious danger threatening our lives and property was fast approaching!
This fear prompted very swift action without panic or wasting precious time. Ann hauled important papers, valuables, and photo albums to a more secure location. We followed safety protocol to protect our lives as best we could as we waited out the storm in the most secure part of our home. Thankfully, that tornado passed over without causing damage. The point is, we were prepared in advance of the storm. We had a plan.
Plan for Economic Storms
When you have a plan, you avoid panic and the accompanying risk of making poor decisions. “The plans of the diligent lead to profit as surely as haste leads to poverty.” (Proverbs 21:5 NIV)
The key to any threat is to stay ahead of the problem.
Crisis management involves anticipation, planning, and implementation. Being proactive can diminish potential damage. Procrastination invites it.
“Light dawns in the darkness for the upright; he is gracious, merciful, and righteous. It is well with the man who deals generously and lends; who conducts his affairs with justice. For the righteous will never be moved; he will be remembered forever. He is not afraid of bad news; his heart is firm, trusting in the Lord.” (Psalm 112:4- 7 ESV)
Inflation May Not Last Long
Greg McBride, chief financial analyst at Bankrate.com, says, “Price rebounds coming out of a recession is normal.” We are certainly seeing that! Prices for gasoline, used cars and trucks, housing, raw materials, groceries, etc. have all increased. Stimulus spending coupled with supply chain issues is driving prices up and decreasing purchasing power. Inflation accelerated at its fastest pace in more than 12 years with consumer prices up 4.2%. See the Consumer Price Index (CPI) at the Bureau of Labor Statistics.
The Federal Reserve says that the nation’s current state of inflation is transitory. That could mean two months or eighteen. Regardless, it is eating away at income, savings, and retirement plans. If high inflation is on the horizon, the Federal Reserve will have to increase interest rates. That could hurt those who carry a lot of debt.
In my recent book, Seven Gray Swans: Trends that Threaten Our Financial Future, I consider other economic threats that we should keep in full view as we navigate a volatile economic environment. I think you will benefit from reading it.
This article was originally published on The Christian Post on May 28, 2021
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