Have you noticed that your average bag of groceries is suddenly costing you a lot more than it was a year ago? It’s not in your imagination. What you are experiencing is the effects of inflation.
Find out what inflation is and how it could affect you in 2022.
Inflation describes a general rise in the cost of all consumer goods and services in response to various market forces.
According to recent data, inflation is up 7% in the first quarter of 2022 and continues to rise. When inflation starts to creep out of control, the federal reserve tends to increase interests rates as a result. While this can settle inflation, it also increases the risk of economic recession.
The global economy has been through one of the most tumultuous periods in recent history, following the emergence of the Covid-19 pandemic. Countries worldwide had to make emergency cash available to offset the effects of shutting down businesses in response to the threat of Covid-19.
At the same time, we experienced a crisis in global trade and a dramatic shift in the supply and demand of commodities such as crude oil. We have not faced an economic shake-up of this magnitude since the second world war, and as such, we are all facing economic uncertainly.
However, one of the most apparent effects of the pandemic on our economy is rising inflation. While many economists remain optimistic that current inflation figures are transitory, it’s wise to prepare for a financially challenging year.
The reality is that while your paycheck may have remained the same over the past year, what you can do with that paycheck has not.
This means that if you were just breaking even on income versus expenses in 2021, you are likely to find yourself at a loss in the year ahead.
Your paycheck is not likely to rise in line with inflation in the short term, and therefore you have a few options to consider:
If you are the recipient of a structured settlement or annuity, you have the option to sell some or all of your monthly payments for a lump sum of cash to finance the changes in lifestyle that will empower you to thrive in a high-inflation market. Reach out o an Accounts Manager at Rising Capital to discuss your options.