Stephen Bird Recap
The world has seen many changes in the last few years, none more significant than the way that finance has changed. Gone are the days when a family could get by on one wage. Nowadays it is not uncommon for both partners to work full-time, with one often having to find an extra job on top of this just to make ends meet. The cost-of-living increases over time, and so does the gap between what we earn and what is required for each individual’s lifestyle.
Many people believe that inflation is a good thing, as it usually indicates economic growth which should lead to higher wages for workers in general. This may be true, but remember that inflation does not come in a pre-defined manner, and so the sooner you adjust your savings, the less likely it is that your income will fall behind.
Inflation usually occurs due to government printing too much money. If everyone spent their entire lifetime getting paid with paper money instead of electronic transfers, we would all be incredibly rich. The advantage of this type of “job” is that everyone gets paid for their work, and no one feels like they are being underpaid. However, the disadvantages include increased taxation which leads to a general lowering of our standard of living and lower spending power.
When consumers have the choice between deflation (inflation-free) and inflation, they usually choose to keep their money in a savings account for as long as possible. This is because if there is no rate of inflation, then their money will simply find itself purchasing more goods and services over time. In other words, you can get more for your money every day.
Inflation represents an unfortunate loss of value to savers; in many ways it is like giving them an unexpected tax rise. Inflation also kills off economic growth by discouraging people from spending their money on goods and services which are now too expensive for them to buy. Find out more: http://stephenbirdabrdn.medium.com/