6 Ways To Protect Your Finances From Inflation
By: Kalpen Patel
Tags: Financial Freedom, Money Mindset, Money Management, Inflation, Money

Hi everyone, thank you for coming back to my blog. I hope you found my last blog interesting and useful, where I covered ‘7 Ways To Decide If You Should Save, Invest Or Pay Off Debt’.

In today’s blog, I am going to cover the different ways in which you may be able to protect your finances from inflation, before inflation starts eating up your savings and ruins any of your plans for the future.

Here are the ways you may be able to protect your finances from inflation:

1. Understand purchasing power

Purchasing power refers to your ability to buy items such as necessities and luxuries. One of the main issues with inflation is that your purchasing power goes down as inflation goes up. For example, your £1 could buy an item yesterday, but today you’ll need £3 to buy the same item.

Unfortunately, interest rates and incomes can’t always keep up with inflation.

2. Consider investing in the stock market

If you have investments in the stock market, instead of taking them out after every drop, plan a long term strategy. Long term investments in stocks may protect you from inflation.

Commodities tend to increase in value during inflation. For example, coffee or grains may survive inflation well on the stock market because they are commodities.

For a beginner’s guide on how to invest please ready my previous 3 part blogs on Investing For Beginners.

3. Consider investing in property

Property can be a powerful investment tool, however, although property prices can go up during inflation, you have to consider your ability to handle all of the loans and mortgages as a result of the investment. Even if you rent out the properties, how will you handle periods without renters?

Commercial property can be even more complicated than buying a home. If you want to invest in commercial property, then you also have to deal with planning laws and extra fees.

4. Consider investing in your future

You have the power to survive inflation, and you can take steps to deal with it. Have you considered investing in your future by getting addtional qualifications or becoming more financially literate?

Additional qualifications, maybe in your current field or something completely different, may help you earn more money and provide a bigger cushion during times of inflation.

Becoming more financially literate will enable you to understand how you can make money work for you so that the effect of inflation is reduced during your life, meaning your future income and plans are more likely to stay intact.

Here are my personal recommendations to get started on becoming for financially literate:

5. Consider making your income sources grow

This ties in with the point above because if you can make your sources of income increase, either through a promotion at work with any extra qualifications or a side hustle from becoming more financially literate, then inflation will have a lower impact on you.

6. Get rid of debt

As inflation rises, the interest rates on your debts can also rises, so if you can pay off your debts, then you don’t have to worry about it. However, if you can’t pay off all of your debts, be prepared to make higher payments during times of inflation.

For ways on how to pay off credit card related debt sooner, click here.