June 24, 2011 > Battling Inflation
By Alan L. Olsen, CPA, MBA (tax)
Are you concerned about inflation? Over the past 12 months, the United States has seen a 3.2% increase in the price of goods1. Gas prices continue to climb, as does food. The current recession has left many unemployed and in search of work. How can you have an optimistic outlook on the future with little change in your pocket as you battle inflation? The following tips may help:
1. Eliminate your debt. A good portion of Americans have a heavy load of consumer debt. As the price of goods escalates, an extra credit card bill can cut a budget thin. Start eliminating your debt by setting a goal to pay a little more down on your credit card debt monthly. The quicker that you pay off the debt, the more that you will save in interest.
2. Follow a Budget. A wise piece of advice to follow is "If you can't afford it, don't buy it." Creating and following a budget will help you to stay out of debt and track your expenses. If you are already in debt, include in your budget a monthly portion to continue paying off your debt.
3. Prepare for a "rainy day". Have you ever considered having a store of food and basic necessities? Purchasing a few extra items weekly will help you build storage that you can use if prices escalate above your means. Food, water, soap and other day-to-day necessities are good items to keep in excess.
4. Explore self-sufficiency. Living a self-sufficient lifestyle can help battle inflation. You don't need to be a farmer in order to do this. If you have adequate yard space, consider planting a garden2 or raising chickens for eggs. Producing your own food will cut down on costs and weaken your dependency on others. In the event of a food shortage, you will be more prepared.
As we face the future, there are many unknowns. Individual circumstances vary, but proper preparation will help you to battle inflation in our current economy.
Alan L. Olsen is Managing Partner at Greenstein, Rogoff, Olsen & Co., LLP, a leading CPA firm in the San Francisco Bay Area. With more than 25 years of experience in public accounting, Alan works with some of the most successful venture capitalists in the world, developing innovative financial strategies for individuals and businesses.
1 "Consumer Price Index Summary." bls.gov U.S. Small Business Administration. n.d. Web. 27 May 2011.
2 "4 Ways Retirees Can Battle Inflation" moneycentral.msn.com msn 21 May 2009. Web. 27 May 2011.