Inflation. What is it?

Inflation can be difficult to wrap your head around. Inflation is defined as a general rise in prices, meaning that the cost of living goes up, and your dollar does not buy as much. Inflation can significantly impact your life, especially if you are on a fixed income or have to budget carefully. Inflation is essentially the loss of purchasing power of money and over time each dollar you have will buy less and less. We understand this can be problematic for our members.

What is Inflation?

Inflation is an economic term referring to the sustained increase in prices of goods and services over time. It occurs when too much money is in circulation or when government debt increases substantially. There are different ways to measure inflation, but the most common is the Consumer Price Index (CPI). The CPI measures the average change in prices for goods and services effecting our every day living, like food, housing, transportation, and healthcare. Basically, you’re spending more money to get the same thing. It can be challenging to manage, especially if you are already living paycheck to paycheck. Consumers may find it challenging to keep up with rising prices, which can decrease the standard of living. In an extreme case, hyperinflation can occur, where prices rise so quickly that the currency becomes worthless.

How to Protect Yourself From Inflation’s Effects

You can protect yourself from inflation by investing in stocks, bonds, and other assets that will hold their value or increase in value as prices rise. New habits, such as keeping expenses low and living within your means, might have to be learned. Large purchases may have to be put on hold, or you may have to wait just a little longer while you set money aside and save. Another way to invest for yourself is to take advantage of products that benefit from rising rates, such as certificates of deposit, money markets, and bonds. Click here to see our Certificate of Deposit Rates.

Other ways to help protect yourself is to lock into a low fixed interest rate on a loan or deposit monthly into an interest-bearing Savings Account. Try to figure a monthly amount into your budget to deposit and save. Experts recommend saving 15-20% of your earnings for emergency funds or rainy days.

Financial education is also a great way to educate yourself and keep your head above water. Independent's partnership with Zogo will help you navigate your finances. Zogo is a mobile app offering you real-life rewards for learning about real-life financial topics. Zogo offers over 300 modules in over 20 different categories. We also offer Certificates of Deposit that allow you to grow your money over time, as well as short-term loan options designed to help build your credit and get you through the hard times.

Independent Federal Credit Union is here to help! Reach out to us and let us help you navigate these difficult times.