MONEY HACKS: What Does Inflation Do to My Wallet?

As we approach the holiday season, many of you might have noticed groceries, gas, and other good have increased in price (a lot) and have been hearing about “inflation.” What is this? In this Money Hacks video, we talk about inflation – what it is, what it means, and what you should be thinking about. Check it out here –

Any money questions you’d like answered? Our Money Hacks series is created from conversations we have with employees, investors, savers, and all people planning for their financial futures. What topics are on your mind for our next episode? Email us here!

Video Transcript:

Hey, this is Alex with AFS 401(k) it's episode number 85 of Money Hacks and for the last day, month, maybe the entire year investors have been hearing about and talking about inflation, and do we have a heightened level of inflation? Now the federal reserve has been talking about it being transitory, meaning that it's temporary and the increase in costs of goods and services will start to go down.

But as many individuals and families have maybe read about you, might've seen in an article, but certainly experienced when it comes to your wallet. Inflation is here right now. What is, well, very simply put it's this increases in the cost of goods and services that we buy on a regular basis. The most obvious of this, I think is with respect to groceries.

When you go to the grocery store and you feel like you spend $150 or $200 and you didn't really get that much, and maybe a year ago you were spending $110 or $100, but we're starting to see inflation spread across the economy earlier this year prices on things like used cars or used vehicles have gone up dramatically.

It can be attributed to the low-interest-rate environment and easy money policies employed by the federal reserve to get us through the COVID pandemic and get the economy moving again, it can also be attributed to some of the supply chain issues that we've been seeing across the last several months, and that seemed to still persist.

As a bonus, I've heard if you're going to be doing some holiday shopping, you might want to start it early 'cause a lot of the things that you or your family, maybe your kids want may be hard to find come late, November, early December.

So, is inflation here to stay? Is it something that will start to go back down and you'll see costs come in line with what you're used to, it's hard to say for sure, and there's definitely a couple of different camps on this, but the one challenge that we have with inflation is that even as the financial markets have done well through 2021, and even the last several years, and maybe you feel like you have more money in your retirement accounts or other investments that you have if inflation ticks up and stays up at a higher level, it means doing things and buying things is going to cost us a lot more.

And therefore, the appreciation we may have seen in our assets, or even our incomes perhaps are not as real as the dollar amounts we see on paper or in our bank account. So with that in mind, something to keep an eye on, but also it's a good time, as I always say, to revisit your overall cash flow, your spending, and make sure you're still hitting those financial goals and milestones that you've set for yourself throughout the year.

This is also a great time to reassess and start planning as we get into the holiday season when spending can pick up. We're also coupled with I think, a renewed spirit of getting back out and getting back to a more normal life, meaning that perhaps you're going to have additional expenses as you go into the end of 21 and into 2022.

So, if you have questions, I'd love for you to reach out on social or find our team at AFS 401k, check out our site moneynav.com Hope this video was helpful! See you again, next time!