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How to Deal with the Impact of Inflation

Have you seen what’s going on with prices these days?

I went out shopping last night and I was taken aback.

Here’s what I found:

👉 Butter – $6.89 per pound. The last time I bought it, I paid $4.29.

👉 Black beans in a can – $1.29. Previous price: $1.18 and just a month before that it was $0.99.

(I know, I know, I can buy a heap of dry black beans, toss them in the Instant Pot, and get them to done for a fraction of the price. I sometimes do that; but more often than not, I get lazy. 🤷‍♀️ )

👉 The cheese my daughter loves – $15.99. Not that long ago, I paid $12.50.

👉 Gas to fill up my car (thank heavens it’s a Hybrid!) – $1.81/litre. The last time I filled up, I paid $1.48 and thought that was crazy expensive.

This is just the stuff from last night.

We’ve also received a letter from the accounting firm we work with informing us that they must raise their prices 10% – 15% to keep up with the rising cost of goods.

10 to 15 per cent. 😲

Hello major inflation

The above are just a few small examples of the rampant inflation we are all experiencing at the moment.

Inflation is the rate of increase in prices over a given period of time.

Given what we’re seeing around us and given the impact of the awful invasion of Ukraine by Russia, we’re not done with all this volatility.

(Btw, I rarely comment on politics in my work unless it has a direct impact on women’s financial well-being, but I’m horrified by what Putin and his enablers are doing to Ukraine. My heart – and my dollars – go out to them.)

When stuff like this happens – as in rampant inflation – it’s easy to get sucked into the panic and the hype.

Instead I offer you two things today: Perspective and a plan.

Perspective

The Bank of Canada tries to keep inflation somewhere in the 2% to 3% range, but clearly that hasn’t happened ever since the pandemic began.

Here’s a telling chart from Trading Economics showing the inflation rate in Canada over the last 5 years.

See the huge drop just a few months into 2020?

That’s when the pandemic started and the world as we knew it came to a grinding halt.

Then supply chains became disrupted and prices started to climb.

As you can see from the chart, inflation has been climbing steadily since then and is now over 5%.

Crazy, right?

Remarkable, yes, but it’s not unprecedented.

If you pull back the curtain ten years, it still looks like we’re going through Wild West moments with respect to pricing increases.


But a much different picture emerges when you take a historic perspective and look at a span of more than 80 years:

Thankfully, we’re nowhere near the hyper inflation of the post-WWII era, the 1970s and the 1980s.

Is it fun to face 5+% inflation?

Absolutely not, and it will have an outsized impact on those at the lower end of the socio-economic spectrum.

But for most of us, there is no need to panic.

The plan

Since I’m a big believer in action over angst, let’s look at what you can do to stay in control of your finances through these uncertain times.

✔️ Action Step #1 – Track your spending

It’s impossible to create an effective plan for your dollars if you don’t know where your money is going.

So step #1 is to track the outflow of money every week, then create monthly summaries.

Tracking can be as simple as pulling up your bank and credit card statements every week to make note of what you spent and to include it in a category that is meaningful for you.

That way, you get an idea of what you’re spending on a granular level (i.e. item by item) and also at a higher level (i.e. by category).

The goal is to gain visibility into your spending.


✔️ Action Step #2 – Make values-based choices

Having a collection of numbers is useless if you don’t gain insights from them.

Take a moment to really look into what you’re buying with your dollars.

Do those purchases line up with your core values and your goals?

Even if they do, are they in your highest, best interest right now?

Get rid of the spending that doesn’t meet the two criteria above.

When you use my Value-Based Assessment Method, you can free up a lot of extra cash to put into an Emergency Fund or to pay off corrosive debt – both of which lead to greater peace of mind.

 

✔️ Action Step #3 – Look for ways to increase your income

One of the most human responses to dealing with increasing costs is to make cutbacks.

Chop and slash.

That will only get you so far and risks sending you into Scarcity Mindset Mode.

I want you to think differently, though. More strategically.

Sure, I encourage getting maximum value from your dollars and getting rid of the superfluous bits, if appropriate and if needed.

However, there’s another way to deal with the higher cost of things…

Make more money. 💰

👉 If you’re self-employed, when was the last time you raised your prices?

Or offered a value-add item to increase your top line in a simple way?

It might be time for that.

Btw, if the latter sentence triggered a meltdown in your brain with your inner voice screaming, “You can’t do that!”, I’m going to suggest that you may be dealing with a good old mindset issue.

I’ll get to mindset next week. It’s kind of a big deal when it comes to financial health.

 

👉 If you’re an employee, when was the last time you considered if a raise is in order?

As in consider your industry, look at the salary for comparable work, think about the skills you’ve acquired in the past few years, what you’ve brought to the table for your company – then prepare your negotiation strategy?

Now’s a great time to consider this.

When you don’t ask, you receive a lot less.

 

👉 Can you make some money on the side doing stuff you enjoy – house sitting, dog walking, tutoring, building simple websites, tech support, or whatever skills are in your zone of genius?

So many cool businesses have been started over the years by women who just wanted to earn an extra $1,000.

Start small.

It wouldn’t take a fortune to cover the increase cost of goods in your world, and it might just bring you a heap of joy in the process.

The idea here is to explore different ways to grow the amount of money coming into your world.

 

Stay in control

The bottom line is that as long as you’re in control of your finances, you’ll be fine.

You will get through this period of volatility.

If you’re not in control of your money and you’d like some help getting there, reach out.

I’m here for you. It’s what I do, in a safe, no judgement environment.

We’ll chat again soon.

Love,
Doris 💖

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