With the economy heating up (the Atlanta Fed is now expecting a 5.4% growth rate), many economists and financial professionals are growing increasingly concerned about inflation. And there are signs that inflation is starting to pick up. Inflation can lead to more than just higher prices, including higher interest rates, job cuts as companies face higher prices for raw materials, and even recession. So, how can we prepare for a period of high inflation?
1- Get your finances in order. Reduce your living expenses as much as possible. If you are in debt, try to pay it off (a good use for those tax bonus checks many are getting). Refinance larger debt (such as mortgages) into low fixed rate loans if possible. Look for ways to increase your income.
2- Stock up on canned & dry foods, water, medicine, soap, toothpaste, first aid supplies, matches, firewood, shoes, clothing, and any other necessities you might need that will store for at least a year without spoiling. Consider buying your next set of tires now.
3- Raise a portion of your own food by planting a garden. Consider planting fruit & nut trees and berry bushes if you have the room. If you live in an apartment or condo, consider participating in a nearby community garden (or starting one).
4- Make improvements to your home’s energy efficiency to reduce the impact of high energy inflation. Most homes and other buildings are not very energy efficient, and lots can be done to improve their energy efficiency, leading to lower energy costs. These improvements can range from the inexpensive (such as filling in gaps where pipes & wires come into the house with a can of spray foam insulation) to the expensive (such as replacing your old windows with energy efficient windows).
5- Take steps to improve your vehicle’s mileage to reduce the impact of rising gasoline prices. Consider trading to a more fuel efficient vehicle.
6- Take care of your health so that you are less likely to need expensive medical treatment. Now is also the time to get any elective procedures you’ve been considering, such as LASIK eye surgery, mole removal, or orthodontics.
7- Think about your and your family’s personal security. Crime and even civil unrest are likely to increase. Take steps now to protect yourself and your family. Also, pay close attention to preventing identity theft.
8- Investing in gold, silver and other commodities could be quite profitable during a period of very high inflation. Gold & silver investing should be on your “to do” list, but it should be near the bottom after you’ve taken care of other basics first. Remember, wealth is not wealth if you owe it to someone else.
9- Take steps to protect your current job. I know that the employment situation has improved dramatically over the last year, but good times won’t last forever. High inflation will mean higher costs of raw materials for manufacturers and inventory for retailers. It will also mean that their customers will have less discretionary income, reducing sells. Companies will try to manage these higher costs and slowing sells by reducing labor costs (wage freezes, hiring freezes, and eventually layoffs).
The single most important thing you can do now to survive any future chaos is to start taking responsibility for your own life.
Note Well: Economic times are good right now, but nothing lasts forever. The time to prepare for bad times is during the good times, before it is too late.
I own and recommend “Emergency Food Storage & Survival Handbook“ by Peggy Layton. I have previously written a book review, which you can read by clicking here, but the bottom line is that this book is by for the best emergency food storage book I’ve read. HIGHLY recommended.